Are Settlement Loans for Real?

Have you ever heard of settlement loans? While they may sound like they’re too good to be true, they’re really not. These loans are simply a way for you to access a portion of your likely winnings if you are the plaintiff in a personal injury lawsuit. They are not for everyone, and you do have to meet a few qualifications, but litigation funding can be a way for you to stave off financial difficulty while you wait for your lawsuit to settle or to arrive at a jury award.

Settlement loans are real loans – with several major differences versus other kinds of loans

If you’ve ever needed some extra cash for something, you may have applied for a loan previously. Chances are, you had to jump through a lot of hoops to do it. You had to submit to a credit check, provide collateral, and go through a lengthy application process. Even then, you may have been denied your loan if everything didn’t check out. Settlement funding is usually quite a bit easier to qualify for than that.

With settlement loans (also called “litigation financing”), you don’t have to submit to a credit check or provide collateral. All that’s necessary is for you to have a valid, pending lawsuit that’s going toward settlement or is likely to result in a jury award. It is required that you hired your lawyer on contingency, meaning that he or she will not get paid unless you win your case; in lieu of upfront fees, your lawyer takes a portion of your winnings as payment after the win – but if you lose, your lawyer gets nothing.

This type of litigation financing works something like that. If you apply to a company that offers these types of loans and you qualify, in that you’ve hired your lawyer on contingency, you have a valid personal injury case pending, and you’re likely to settle or come to some sort of jury award conclusion, the company will approve your application and then will lend you a portion of your likely winnings, usually about 10%. The only other catch this is that your lawyer, too, has to agree that applying for one of these loans is a good idea. Both of you must sign off on the application, or you will not qualify.

However, once you qualify for settlement loans, you get the money you need to live, while you wait for your personal injury case to complete. If you win your case, the company that lent you the money will ask for it back, plus fees and interest – BUT, you only repay the loan once you receive your settlement money. If you lose your case, though, the company gets nothing and you simply walk away owing nothing, no worse off financially.

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