A pre settlement loan is a kind of lawsuit element normally given to help plaintiffs maintain a stable position. Individuals who already have pre-defined cases go to legal funding companies to file for a compensation amount. In this case, the effete complainant would opt for a settlement loan to pay for medical or other urgent financial matters. Basically, this kind of loan is dependent on the strength of the case and the actual amount of damages to be awarded once a verdict has been reached. Because of the nature of settlement loans, they normally involve higher risks and if a favorable decision is arrived at, this will equate a higher profit for the lending company or entity.
How Can I Avail of These Loans?
An applicant who is facing financial troubles because of a pending lawsuit in court, stopping him from performing his everyday duties and thus from earning a living, can look for pre settlement funding companies that may also be suggested by his lawyer. What the company does is to contact the lawyer and ask for the details corresponding to the case. Based on the details acquired, an analyst for the company will normally scrutinize the merits involved and determine an estimate of the possible amount to be won once the case is to be decided. After this, it is now at the discretion of the lending company, whether they would provide the cash advance sought by the plaintiff or not.
How Do They Work?
The premise behind these loans is pretty simple: once the case has been settled, the loan, coupled with some extra charges, will be then paid by the client to the financing company. By their very essence, settlement loans are non-recourse types.
Once an applicant submits his case for the acquisition of a pre settlement loan, the legal financing company will investigate the case at hand, analyze the type, study the strength, determine the success rate and offer an amount of money in return for the complainant’s promise that a part of the monetary settlement will go to the creditor.
These pre settlement loans are considered non-recourse loans because generally, the cash advance is not a loan, per se, but an “investment” which the plaintiff is obligated to pay once the turnout of the case is successful. However, it is important to bear in mind that for these types of cases, a final decision may take up a huge amount of time, which can put the client at the losing end of the bargain. Companies often have strict employees who study the case because if the merits are not that strong, then a cash advance will not be granted. This action may be justified by the fact that there is a risk involved in the whole process.
When the injured person has sustained serious injuries and disabilities because of the accident from which the case arises, these settlement funding loans can be of great help, especially if the administration of justice will drag on for several months and years.