Settlement Loans: What They Are, and How They May Benefit You

If you’re a plaintiff in a lawsuit, you know that the legal process can take months or even years to complete. Even if you win your case, the defendant or respondent can usually appeal so that any monies you collect as a result of the judgment in your favor are delayed.

With settlement loans, you don’t have to settle

Plaintiffs unfortunately often settle their cases when they could take them to court and win simply because of the delays that can happen with payment once the case is decided in their favor. If they settle their cases, they reason, they get at least some money, and they get it right away.

Settlement loans can give you the best of both worlds, in that you don’t have to settle your case just to get some money up front. With litigation financing, you can collect a small portion of your expected judgment (usually about 10% of the total) while you wait for your case to work its way through the justice system and come to a conclusion. If you lose, you don’t have to pay the loan back, and if you win, you’ll pay the loan back only when you have your money in hand.

Settlement loans are really debts that you don’t have to repay if for some reason you should lose your case. There’s no credit check, no income level verification, and no job verification to qualify for litigation financing. Instead, the company offering the settlement loan looks at the validity of your lawsuit to determine whether or not you will actually qualify.

Types of loans

There are two types of settlement loans. The first is a loan that’s offered before your case has come to a conclusion. The company offering the loan has no guarantee that you will win your case, but based upon the specifics of the case, decides that you’re a good risk and offers you the money once you apply for it. The second type of loan is offered after the case is settled and you’ve won, but before you’ve been given any type of monetary compensation; cases that are being appealed by the defendant or respondent qualify as this second type.

Considerations

If your lawsuit is frivolous, settlement loans are off-limits. The companies who offer litigation financing will research your case very thoroughly to make sure it has merit. You must also have retained your attorney on contingency to qualify for this type of loan (meaning that the attorney, too, receives no monies upfront but will only be paid if you win your case). In addition, your attorney must agree to the settlement loan, in that you will not qualify for one if your attorney does not sign off on it as well.