In my experience as an attorney I have come across several clients who have sent me papers from so-called “lawsuit settlement funding” services. The basic premise of such services is that they will advance a client money in anticipation of getting repaid once the settlement or judgment on the client’s case comes through. With most lawsuit loan companies the client does not have to pay if the settlement or judgment does not come through. The interest rate that is charged on such loans, however, is atrocious. After viewing the paperwork from one client’s loan, I saw that such places can charge interest per day and, after several years, my client is now on the hook for more than twice the amount of the original loan.
Although my advice is to never consider such loans, it is understandable why some people feel as though they have no option but to consider one. Some people were barely scraping by when healthy and employed, and an injury caused a huge setback in their lives. If this is the case, it is best to only borrow the minimum amount needed and to understand how much you will owe once the loan is expected to be repaid. Cases can drag on for months and even years so it is wise to ask the loan company to estimate what the final payoff amount will be after so many months or years. Remember that the loan amount will be coming out of the money that could potentially come back to you. Your attorney is working hard to get you the maximum amount and you are not helping by adding to the cost of the case. A case with a high number of creditors irrelevant to the case makes the case harder to settle because your attorney has to fight to negotiate a higher offer.
If one must consider a lawsuit loan, it is best to shop around. Internet searches will provide you with a variety of options. It will be worth it to check for any reviews of such companies and to call and ask for information on what rates they will charge for their services. If you decide to go with a company, they will send you a lot of paperwork that needs to be completed by your attorney. Sometimes you may be denied. This has more to do with the state of the economy, the credit-worthiness of the defendant, and a bit about the facts of the case.
This article is for informational purposes only and is not to be construed as legal advice. Your case may be different. Hiring an attorney immediately will protect your rights. Consult an attorney in your area for further guidance.