Lawsuit funding can provide you with money to pay your legal fees as you await a settlement or a judgment. These are sometimes referred to as settlement loans – they are loans provided with a future settlement as collateral. You will also hear them called lawsuit cash advance loans or litigation financing.

The Purpose of Lawsuit Funding and Settlement Loans

Lawsuit funding can give you the financial means to go forward with civil litigation when you otherwise couldn’t pay attorney fees. Lawsuit funding is a common practice when the lawsuit being pursued has a high likelihood of producing a significant settlement or judgment.

Settlement loans, sometimes called pre-settlement loans or settlement funding, can be helpful even if your attorney is working on a contingency basis. Settlement loans and lawsuit cash advances can help you pay your bills while awaiting a settlement or judgment when you’ve been injured through someone else’s negligence and you cannot work, or if have high medical bills. For some, this type of loan makes the difference between keeping or losing their home and taking care of your family or going hungry.

Common types of cases in which litigation funding is used include physical or sexual abuse, discrimination of all kinds, wrongful injury or death, product liability, motor vehicle injury, property liability, toxic work environment, injuries at work, wrongful termination, breach of contract, patent or copyright infringement and medical malpractice of all types.

How to Obtain Lawsuit Funding & Settlement Loans

There are lenders who specialize in providing litigation financing and other types of lawsuit cash advance loans.

The first step is to apply for a loan. (Read a step by step) You will need to provide documentation regarding your civil litigation case. The lender will review the case and decide whether or not to extend lawsuit funding.

If the settlement loans company decides to provide you with a loan, the amount of interest you pay is often based on the strength of the case. The greater the likelihood that you will receive a judgment or settlement, the lower the interest rate will be. This is the companies’ way of offsetting their risk.

In some cases, if lawsuit funding is extended and the lawsuit is lost, the borrower does not have to repay the loan.

Other Requirements to Receive Lawsuit Funding or a Settlement Loan

In order for a lender to be willing to provide you with a lawsuit cash advance, most will need to discuss your case with your attorney and have documentation sent to them. The lender will want to evaluate the merits of your case as consider the risk. This is especially true for those litigation funding companies that do not require you to pay them back if you lose.

Secondly, most will not make loans to individuals who have filed for bankruptcy in the past. In addition, they will want a complete picture your financial situation in order to assess the possibility that you’ll file for bankruptcy before they receive their money. If you’re a high risk, they won’t make the loan.

Before you Apply for Lawsuit Funding or Settlement Loans

Review several companies and learn about their interest rates. Make sure you fully understand the contract you’d be entering into if a loan is approved and you take it.

This type of litigation funding can be very helpful when cash is needed to recover damages through a civil lawsuit. It can also be the difference between being able to pay your bills and going bankrupt while await a settlement.