Accident cases can be costly to fight, particularly if the case has resulted in grievous injuries and seems to be dragging on forever. Lawsuit funding, also known as settlement funding and lawsuit loans (although it is not a loan), is financial support offered by funding companies that helps accident victims meet litigation expenses as well as cover living expenses, mortgage payments and so forth.
If you or someone you know has sustained injury in a road accident, here are three tips that will help you find a reliable settlement funding company.
Qualifying for a lawsuit advance
Most lawsuit loans are nonrecourse loans, which means that you will not need to repay the amount if you lose the case or receive less compensation than was expected. This means that the lender is taking a risk in offering you cash advance that they may not get back. For this reason, lending companies offer pre-settlement funding only in cases where they are convinced of a positive outcome.
On receiving your request for a lawsuit cash advance, the lending company will speak with your lawyer to understand the likelihood of gaining a settlement. They will share this information with their in-house experts, who will evaluate your case for the possibility of a positive outcome. Once the lending company is convinced (which could take anywhere from a few days to a couple of weeks), they will offer you the monies, often within a few hours of approval.
Finding a trusted litigation funding company
Most law firms and attorneys today have tie-ups with lawsuit lenders, and your accident injury lawyer will most likely recommend one on their own. Before you take out a lawsuit loan, it is important to understand the terms and conditions governing the funding, including the interest rate charged by the lender and any additional conditions if the case drags on beyond a certain period.
If you use the services of the lending company associated with your lawyer, you will not have to ensure that your attorney cooperates with the lender during the approval process.
Another way to find a reputable litigation lender is through the American Legal Finance Association (ALFA) or through a referral or recommendation from colleagues, family or friends.
Remember that if you win, the lawsuit lender as well as the lawyer will need to be paid back from the settlement monies you receive, and you can take home whatever remains. Therefore, it’s important to fully understand the terms of a lawsuit advance before you sign on the dotted line.
How to compare different lawsuit funding options
It’s a good idea to contact more than one lawsuit funding company and compare each on the basis of the following key factors: funding fees (interest rate), application fee (if any), information regarding compounding of interest, confirmation that you will not be liable to repay the loan if you lose the case and, lastly, confirmation that you will not need to pay them more than your compensation amount.