Discussing the Pros of Lawsuit Loans
Dealing with civil litigation as a plaintiff can be overwhelming, both emotionally and financially. Lawsuit loans can ease this burden because it offers immediate financial support to plaintiffs while their cases remain undecided. In this post, we examine the pros of lawsuit loans and discuss the impact of each. Our hope is that afterwards, the reader will have a better idea of what lawsuit loans offer and how to use the pros of lawsuit loans properly to harness these unique specialty financial products.
What are Lawsuit Loans?
Lawsuit loans are financial transactions which offer support to plaintiffs involved in pending litigation. They are structured as advances on future proceeds and as such, are not technically loans in the traditional sense because repayment is entirely dependent upon plaintiffs “winning” their cases.
Due to the unique nature of these deals, there are some pros of lawsuit loans that are not present in traditional lending, the most important of which is that they are not repaid if plaintiffs fail to secure compensation for their pending claims. We examine the pros of lawsuit loans in more detail below.
Lawsuit Loans Solve Financial Strain
While there is plenty of criticism regarding the pre-settlement funding of lawsuits by market participants, there is no doubt that the pros of lawsuit loans are recognized within the legal landscape. They offer immediate financial support to plaintiffs who are strapped for cash while their cases are still pending in the court system.
Many civil lawsuits take years to resolve, leaving many plaintiffs in financial trouble while they wait. This is especially true if plaintiffs are unable to work due to injuries sustained in the very accidents which give rise to their claims.
Unfortunately, insurers tasked to defend many civil lawsuits, use legal tactics to delay the payment of legitimate claims for as long as possible. This causes many plaintiffs to accept less compensation than would be otherwise available if they had the time to allow their attorneys to pursue the lawsuits thoroughly. The ability to avoid these low-ball settlement offers is one of the main advantages of lawsuit funding, why lawsuit loans exist and why they are an accepted solution for plaintiffs’ immediate liquidity issues.
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List of Lawsuit Loan Benefits
Lawsuit Loan Pro #1 – Non-recourse Funding
As stated above, lawsuit loans are repaid if the lawsuit is successfully resolved. If the lawsuit is lost, there is no repayment. Further, because settlement loans are a transfer of property rights in potential future lawsuit proceeds and NOT traditional loans which imply repayment at some point, repayment must come from the recovery itself. Thus, settlement funding companies cannot pursue plaintiffs personally for repayment. This is known as “non-recourse” funding – lawsuit “lenders” have no recourse against plaintiffs personally.
No Credit Check Required
Another pro of lawsuit loans is that credit scores are irrelevant. A large number of lawsuit loan applicants have lower credit scores. They are in financial trouble, after all. Yet lawsuit loans are the advance purchase of future proceeds (settlement). So the only factors are the cases’ merits, not the creditworthiness of the plaintiff.
Lawsuit Loan Pro #3 – Strengthening of Cases
As previously stated, personal injury or other civil plaintiffs decide to settle early for less than they deserve simply to ease immediate financial concerns. Pre-settlement loans help plaintiffs reject lower settlement offers and gives attorneys more time to gather all the evidence, depose (question) witnesses, secure relevant medical testimony, etc. Thus, attorneys are usually better able to negotiate more favorable settlement amounts through the proper building of the case.
Immediate Access to Funds
The personal injury funding process typically takes 24 to 48 hours. In many instances, clients receive same day lawsuit loans. This immediate access to cash helps in times of crisis, and provides necessary resources when they are needed most.
Opportunity for Home Modifications
Injuries might require modifications to your home, such as installing ramps, railings, or other accessibility features. Pre-settlement funding lets you cover these costs, allowing you to live more comfortably and independently while you recover.
Lawsuit Loan Pro – Specialized Medical Treatment
Many lawsuit funding recipients use the money for alternative medical treatments not normally covered by insurance. These could include, such as red light therapy, holistic therapies, yoga or meditation classes, art or music therapy, eastern medical disciplines or new medical devices.
Use for Housing
Plaintiffs use lawsuit loans as down payments on new residential purchases. Some use the money to catch up on past rent, mortgage payments, or other housing debts. Others use money to equip their existing home with upgrades that aid in their recovery. These might include wheelchair access or bathroom fit-ups designed to make it easier to conduct daily living activities.
Use to Relocate
If injuries require relocation near specialized medical facilities, lawsuit loans can cover those expenses. Some clients use the money to move to dryer or warmer climates to aid in their recovery.
Transportation
Transportation is a vital part of modern life. Accordingly, plaintiffs use lawsuit funding for car payments, leases, public transportation and other forms of travel. Access to funds allows plaintiffs to freely move in their daily lives. This can be a significant lawsuit loan “pro” for litigants in need as it ensures plaintiffs can attend medical appointments and legal meetings without hassle.
Improves Financial Stability
Not only does pre-settlement funding help families stay afloat, but it also prevents them from falling into debt, avoids eviction and being forced to move into cheaper housing.
Pro of Lawsuit Loans # 11 – Temporary Help at Home
Pre-settlement funding is sometimes used to hire temporary help, such as housekeepers, cooks, or other personal service providers. This can greatly reduce the burden of daily chores which allows injured plaintiffs to focus on getting better.
Lawsuit Loans for Surgeries
Surgical lawsuit loans are another valuable pro of lawsuit loans. If plaintiffs need surgery, and it is not covered by insurance, lawsuit loan companies will negotiate a cash price (often less than letters of protection), and pay the medical provider directly. This allows for immediate treatment instead of waiting for settlement.
Education or Other Training
In some instances, plaintiffs use lawsuit funding to enroll in higher education programs or vocational training. This may be extremely valuable if a particular plaintiff is unable to return to a previous position due to injuries. Lawsuit funding allows the flexibility to pursue alternative career opportunities that might have to be postponed without immediate access to funds.
Learning More
To learn more about the unique nature of the lawsuit funding business, you can access the library of articles on the Fair Rate Funding Blog. You can also visit our Frequently Asked Questions page.
Or, you can simply give us a call or contact us online. A live representative will answer/contact you and answer any questions you might have.
Why Choose Fair Rate Funding
You obviously have a choice in who you use for legal funding. We’ve been in the legal funding business since 2007 and offer:
- Simple and Easy Process – Approval only on strength of your case.
- Risk – Free Proposition – Only repay if you win your case.
- Rapid Approval and Funding – Approvals often within 24 hrs.
- Up Front Pricing – Absolutely no hidden fees.
Give us a call and learn about your options. We are here to help and are at your service.
Thank you for your interest in Fair Rate Funding.
