In this article, we will discuss five benefits of obtaining lawsuit loans and settlement loans. It is important to realize that, although we use the term loans, these really aren’t “loans.” In reality, they are an advance on the potential-settlement to be obtained in the underlying lawsuit. Litigation funding providers will review the merits of the underlying case and make a determination as to whether, in their opinion, it justifies the funding requested. Keep reading to learn five of the benefits of obtaining your lawsuit loan or settlement loan and why this form of lawsuit funding may be of benefit to you.
Benefit number one: Neither settlement loans nor lawsuit loans require a background check regarding either your credit or criminal-history.
In reality, a pre-settlement loan is nothing more than having an underwriter review the merits of your case and submitting his/her findings to a funding entity that may have an interest in advancing the requested funding in the underlying lawsuit. If so, the entity will advance approximately 10% of the estimated value of the underlying claim. Once again, it is the merits of the underlying case, not your credit-history on which the funding-entities will rely to make a determination as to whether the funding will be advanced.
Benefit number two: If you do not prevail in the underlying case, you do not have to repay the pre-settlement loan advanced.
This is one of the extremely beneficial aspects of obtaining litigation funding. Yes, you read that correctly. If you do lose the underlying lawsuit, you don’t have to repay the money advanced. It is only if you do prevail in your lawsuit that you would be required to pay back the lawsuit funding advanced, in accordance with the agreement.
Benefit number three: In many instances, you will not be forced to settle the underlying lawsuit at a ridiculously low amount because you cannot continue to pursue your claim against the individual who harmed you.
Very frequently, individuals are unable to continue in their course of employment following injuries. Additionally, there are many time-consuming elements involved with the litigation. Such impediments often substantially interfere with a litigant’s ability to work unabated. Due to this, as well as many other factors, obtaining the finances to continue the litigation may prove difficult.
Although in many instances, attorneys may wish to advance funding to their clients themselves, most states prohibit having attorneys get involved with advancing money to any of their clients. Lawsuit loans and settlement loans may provide the financial-boost that you need to avoid abandoning your underlying claim.
Furthermore, such funding may assist you in the following: (1) continuing to pay for medical expenses; (2) making auto payments on time; (3) making your mortgage payments in a timely fashion; and (4) making other payments in a timely manner to avoid adversely affecting your personal credit.
Benefit number four: Although you’re entitled to obtain 10% of the estimated value of the underlying claim, it is not necessary for individuals to obtain that entire amount in the form of either lawsuit loans or settlement loans.
We would encourage you to exercise caution with respect to the foregoing. Although it is true that you do not need to obtain the entire 10% of the estimated value of the underlying claim, it does become more difficult to obtain additional lawsuit funding once the initial funding is advanced.
Therefore, we would suggest that individuals be prudent in making a determination as to the amount that may be required to assist them with their current financial situation. It is important to realize that many loans are for amounts as low as $250. Contrariwise, some individuals obtain either a lawsuit loan or a settlement loan in the amount of $1 million.
Obviously, there are many factors that come into play in making a determination as to how much will be advanced and how much is required to support the litigant in the lawsuit. It is important to realize that many pre-settlement loan entities will allow individuals to obtain future-funding that is required to obtain a successful resolution to the underlying lawsuit.
Benefit number five: Settlement loans and lawsuit loans do not adversely affect the underlying lawsuit in any form or fashion.
Unfortunately, many individuals do suspect that, if they obtain litigation funding, this will in some way adversely affected their lawsuit. Undoubtedly, this stems from a fundamental misunderstanding as to both the nature of the funding obtained and the manner in which these transactions are conducted.
Conversely, once such funding is obtained, the plaintiff is likely to have greater confidence as to the estimated value of the underlying claim. However, if the plaintiff does not desire to do so, the defendant is unlikely to ever know that such funding was either danced or obtained.
It is significant to note that the plaintiff is not required to disclose such funding to the court. However, plaintiffs should carefully consider whether it is prudent to submit a claim for damages that may enable them to obtain any fees related to either lawsuit loans or settlement loans as recoupment/damages. This is a strategy that should be discussed thoroughly with the plaintiff’s attorney.
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