If you are in the middle of a lawsuit and you are pressed for finances, lawsuit loans is a suggestion you are likely to encounter, especially after you have exhausted all the possible sources you had, including borrowing from friends and family members.
It is a proposal that might be looking very appealing, given that you are faced with increasing bills with constrained financial sources, given that you will be borrowing money against the proceeds of the expected settlement.
In as much as these loans have come to the rescue of many, you should be well informed about the pros and cons of going for them because it is not guaranteed that you will have a good experience with them. There are many legal funding companies, including grapeleafcapital , from where you can get such legal funding from, but don’t be in a hurry to go them without understanding all their pros and cons, and that is the meat and potatoes of this piece.
Understanding what lawsuit loans are
It is a fact that filing a lawsuit is not just expensive, but also time-consuming. If, out of the injury, you lose your ability to continue with your normal income earning activity, then sooner or later, you will be swamped with medical bills and your normal bills, but with no money coming in, you will be financially stressed, with no idea of when your case may be settled.
Under such circumstances, it will be imperative that you get additional money from whatever sources you may have at your disposal, including bank loans, advances from credit unions, and borrowing from friends and family members. But where else do you head to after you exhaust all these sources? Lawsuit loans.
Lawsuit loans are designed to help you overcome the financial stress you may run into while you wait for your case to be settled. With this loan type, the legal funding company will take over your rights to part or all of your settlement and in return advance to you monies while your case awaits settlement.
The loan will be due when the settlement is made, and if you lose the case, you won’t have any obligation to repay the lending company for all the money advanced to you. Again, if the settlement is lower than the monies already advanced to you by the legal lending company, you will not be under any obligation to pay the difference so that you can repay all the cash given to you by the lender.
The benefits of lawsuit loans
Here is a brief look at some of the benefits of lawsuit loans, and which makes them appeal to many people in financial distress who still await their cases to be settled-:
Financial reprieve in times of distress
With lawsuit loans, you will get the much-needed breathing space when you thought that you have no other source of income to keep your life on a roll. Through them, you will get the money you need to take care of your normal living expenses, medical bills, mortgage, and car loan payments amongst other financial obligations.
Allows you more time to negotiate for a better settlement
If you are looking forward to getting an award or the settlement so that you can take care of your pressing bills, then going for a lawsuit loan will give you more time to consider all the offers and avoid making a rash decision. As the injured party, your desire is to have the litigation end as soon as possible, but it should end with a positive result. With a lawsuit loan, you will get some financial reprieve so that you can have you focus back on the case, and not how you badly need the money to meet your bills. With such a state of mind, it will be easy to take more time and negotiate with the other party until a favorable settlement is reached on your favor.
No credit checks, no security required
Lawsuit loans are taken against the expected outcome of your pending court case. As such, it is like an insurance on the settlement. You don’t need any credit checks or security to have the loan advanced to you. The legal funding companies will simply look at the merits and facts of your case and make a determination if you a settlement is likely, and based on their evaluation, the loan will be advanced.
Demerits of lawsuit loans
Here are some of the demerits of lawsuit loans, which may make them not to be the best choice even if you need the funds desperately.
They are very expensive
Lawsuits loans are very expensive. At the time of paying back the loan, you will have to repay the borrowed amount plus interests accrued from the date the loan was given to the date the case was settled. The interest rates may range between 27% and 85%, and what makes it painfully expensive is the fact that the interest is compounded on a monthly basis. As such, it is possible to find people paying even more than thrice of the borrowed sum.
Not all cases will interest the legal funding companies
Not all cases will qualify for these kinds of loans. This is because the lending companies are taking very huge risks, and unless they are confident that your case will have a positive outcome in terms of a settlement, they will never be interested in your case. Remember, if you lose the case, you pay nothing to the lender, and if you win a less amount, you also don’t pay anything to top it up. As such, the lenders have to be choosy and not all cases will make them excited.
The loans are not regulated
Unlike other types of loans, which are properly regulated by both state and federal agencies, the lawsuit industry is not regulated by any agency. This gives room to a lot of bad things to just slip through because there is no one watching. This is probably one of the reasons why the interest rates are too high and no one seems to be bothered.