Pre-Settlement Lawsuit Loans
A pre-settlement lawsuit loan is an advance that is given to a plaintiff who has filed a lawsuit against someone; with the promise the amount will be repaid after the lawsuit is won. This is usually a non-recourse type of funding that does not have to be repaid if one loses the suit or is not sufficiently compensated in the lawsuit. Though this is technically a loan, due to legal reasons, it is said not to be a loan and is instead more commonly known as an advance.
A pre-settlement lawsuit advance thus comes with a great risk and, hence, the fees associated with it can be quite high. There are also many legal, practical, and ethical issues to be considered before one applies for such a loan.
To begin the process for a pre-settlement lawsuit loan, a person filing a lawsuit against an individual or a corporation has to approach a financial institution that gives such loans. One must do so with the advice and suggestion of ones attorney. The finance company then contacts the attorney handling the case and verifies the facts of the case. After this, the loan company estimates the value of the expected settlement and offers a loan to the person based on that.
The fee charged in such a case can be either a flat fee or a monthly fee that is accrued every month. After the settlement of the case, when the defendant pays the amount stipulated by the court, the loan amount and the fee are paid back to the lending company.
The pre-settlement loan amount granted by various finance companies varies. It is dependent on the lending company and the nature of the case that one is fighting. Such a pre-settlement advance amount can be as low as $500 or as high as $1,000,000 in rare cases. The repayment percentage can be as high as 15%.
Such pre-settlement funding is essential when a court case drags on for months or years, and a person injured in such a case does not have enough money to survive because of disability or loss of earning potential caused by it or directly linked to the case under preview.
One thing must be kept foremost in mind: Pre-settlement lawsuit loans should be considered only as a last resort.