What is the difference between a lawsuit loan, lawsuit funding or lawsuit financing, legal finance, a lawsuit cash advance, litigation financing and pre-settlement funding?

A:

These all mean essentially the same thing. However, none of these transactions are actually "loans" because they are non-recourse advances. We use the term "lawsuit loan" at this site because that is what these are popularly called.

What is the difference between a lawsuit loan and a traditional loan from a bank or credit union?

A:

A traditional loan has to be repaid regardless of any other events or your ability to repay it. For example, if you get an auto loan, but you lose your job and you cannot make the payments, you are still obliged to repay the loan. The lender will take whatever actions are necessary to collect its money, including repossessing your car. A lawsuit loan only needs to be repaid if and when you win your case at trial or you reach an out-of-court settlement. Here are the major differences between a traditional loan and a non-recourse lawsuit loan:

What are the benefits of a lawsuit loan over a traditional loan?

A:

If you do not qualify for a traditional loan, you could still qualify for a lawsuit loan because the approval criteria are totally different. Plaintiffs in lawsuits often find themselves out of work, so they cannot provide the proof of employment they need to qualify for a bank loan. Some plaintiffs fall behind on their bills, so when they get around to applying for a loan, their credit has been damaged. There is an old adage that banks only lend money to people who do not need it, and there is some truth to that. But to be fair, there are advantages to a traditional loan. Here is a side-by-side comparison.

What is the procedure for receiving a lawsuit loan?

A:

Here is the streamlined process we've developed.

1. You apply online, an underwriter reviews your application, then contacts your attorney for supporting documentation.
2. The underwriter reviews that documentation and makes a loan decision.
3. We send a Claim Investment Agreement to your attorney to review on your behalf.
4. You sign the agreement and your attorney acknowledges the lien we have against the proceeds of your lawsuit.
5. We immediately issue a check and overnight it to you.

What is the purpose behind a lawsuit loan?

A:

The American civil law system has advantages and disadvantages. If you are injured and seeking compensation for your loss, a personal injury attorney will take your case on a contingency basis. The attorney is paid from the proceeds of the settlement, and only if he/she secures a settlement for you. That means you do not have to come up with any money to pay for legal representation on the front end. The downside, however, is that it can take from several months to a year or longer for your case to come to trial. That's several months – maybe even a year of longer – before you actually see any cash from your lawsuit!

A lawsuit loan bridges the gap between your immediate need for cash and the expected proceeds from your pending lawsuit. If you've been out of work and you fell behind on the mortgage, rent or car payments, or any other bills, a lawsuit loan provides immediate cash to pay those bills. If you have medical bills or rehabilitative services that must be paid, or you need to pay for drugs or medical treatments, a lawsuit loan provides cash when it is needed most and may not be available from any other source! You may qualify for worker's comp or unemployment, but those payments do not begin for several weeks, and they are a fraction of what you were earning on the job!

What limitations are there on how I spend the money from my lawsuit loan?

A:

There are no limitations. You are free to use the cash from your lawsuit loan any way you wish. However, the money should not be used frivolously. It should be used to pay for living expenses while you await the outcome of your claim.

Do I need to have an attorney?

A:

Yes. We cannot consider making a lawsuit loan to an applicant who had not retained an attorney. If you believe you have a worthwhile legal claim, but do not know an attorney, we recommend taking advantage of a free attorney referral at www.attorney-referral-service.org.

What types of cases qualify for a lawsuit loan?

A:

Almost any type of personal injury lawsuit qualifies, as well as commercial litigation.

Q:

I have more questions about lawsuit loans.

A:

Submit your question and we will respond by e-mail.