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What Is a Lawsuit Loan?

If you have filed a lawsuit, you will need to ensure that you can pay for any expenses you incur until your settlement arrives. Fortunately, the majority of lawsuits never go to court. This means that all parties involved can reach an agreement without the need for a judge’s impartial ruling. While avoiding court can help everyone save a lot of time and money, it does not ensure that you will get your settlement money quickly. For this reason, many people seek out a lawsuit loan to help pay for the costs in the meantime.

So, what does a lawsuit loan actually do? How does it work? Finally, what are the fees that come with a lawsuit loan? We will answer all of these questions and more, but first, let’s look at the basics of a lawsuit loan and how you can acquire one:

How Does a Lawsuit Loan Work?

A lawsuit loan is similar to a traditional bank loan insofar as the applicant can receive cash to pay for something that they need. However, that’s where the similarities end. Why? Because lawsuit settlement loans provided by companies like Delta Lawsuit Loans come in the form of a non-recourse pre-settlement cash advance.

We use the term lawsuit loan to keep things simple, but it can cause some confusion. In truth, a non-recourse pre-settlement cash advance ensures that you get the cash you need before the settlement process has even begun (hence “pre-settlement”). However, the key difference between a traditional loan and a lawsuit loan is the “non-recourse” part. Basically, this means that if you do not win your settlement, you are not required to pay back the loan. Alternatively, if you do win a cash settlement, you are legally required to pay back a portion of your settlement earnings to the loan provider. In this way, you are obtaining a loan against lawsuit settlements, with little to no financial risk if you’re unable to secure a cash settlement. You can learn more about these differences in our guide on traditional loans vs. pre-settlement cash advances.

Even when a lawsuit is relatively “cut and dry,” it could still take weeks or months to reach a settlement, and even longer to receive the funds in your account. Thus, many people take out lawsuit loans as a way to receive their settlement early. Acquiring pre-settlement funding ensures that you will have enough money to see the lawsuit through to the end and can take advantage of your settlement funds now.

How Much Are Lawsuit Loan Fees?

While the final result of your settlement will ultimately decide how much of the loan you’ll need to pay back, there are some standard pre-settlement funding fees that you’ll need to factor into your budget. Lawsuit loan companies need to have the capital to provide to you (the client). In order to have capital, these companies must charge fees and interest on the money they lend. However, the amount you pay in fees and interest will largely depend on the type of loan contract you sign.

For example, if you win your case and receive a cash settlement, you can secure lower long-term costs by agreeing to a simple-interest contract. In this kind of contract, you’re only responsible for paying interest on the principal cash advance amount. In other words, your loan will not accrue compounded interest. Plaintiffs who anticipate a lengthy or complicated lawsuit process often go with this option to avoid paying a lot of interest.

Alternatively, you can choose to go with a compound-interest loan to secure some of the cheapest interest rates. This is the best option if you believe you can settle your lawsuit quickly and repay the principal loan without accruing a lot of interest. However, if your lawsuit drags on, you could end up paying a lot more, as the interest will also accrue its own interest. Anticipating the complexity of your individual case is a key component to managing the cost of your lawsuit and any loans that you acquire.

Assuming you win your case, you will have to factor in the type of payment agreed upon in the settlement. The defendant can either pay in a lump sum or in parts through a structured settlement. If they pay in parts, you will likely need to pay back your lawsuit loan over time. This means that you will have to pay more in interest.

This is all assuming that you win your lawsuit. If you win your lawsuit in the courts or reach a settlement agreement outside of court, you will need to pay back the principal loan plus any interest. In this case, the interest represents the only additional fees that you would need to pay. On the other hand, if you lose your case in court or are unable to reach any kind of cash settlement, you do not need to pay back the loan.

You can check out this article to learn more about lawsuit loan fees.

How To Get A Lawsuit Settlement Loan

There are several ways to borrow money against lawsuit proceedings. However, you can’t always go to a traditional lending institution. If you do, you may only be able to secure a standard personal loan, which you will have to pay back whether you win or lose. Instead, you can quickly secure same-day pre-settlement funds through a lender that specializes in non-recourse payments like Delta Lawsuit Loans.

You would put us in touch with your lawyer who will provide us with the facts of the case. If the information provided leads us to believe that you will win your case, we can immediately deposit the funds into your bank account.

Are Lawsuit Loans Without Attorney Signatures Possible?

In the vast majority of cases, you will need to have an attorney to get a lawsuit loan. Few (if any) lenders will offer funds without a lawyer, so you will almost always need to provide attorney consent. Getting an attorney’s signature can help lenders ensure that your claim is valid. Your attorney will tell the lender about your case, which allows them to make an informed decision concerning the risk of providing the loan. Remember, lawsuit loan lenders only get their money back if you win the case, so if you have a good chance of winning, you also have a good chance of getting a loan.

Talk to Delta Lawsuit Loans Today

Are you preparing for an upcoming lawsuit? Do you need pre-settlement funds to pay for your expenses while you await compensation? If so, the experts at Delta Lawsuit Loans are ready to help. At Delta Lawsuit Loans, we can provide you with a lawsuit loan while you wait for your attorney to secure the settlement you deserve. We offer personal injury lawsuit loans and various other loan types to help keep you on your feet during difficult times. Feel free to contact our office to learn more.

Over his career, James has successfully built and managed several of his own businesses, sold his company, managed hundreds of employees, operated across the United States and Europe, and completed financings for his own companies in excess of $400 million dollars.

James investment and operating experience includes co-founding one of the largest pre settlement companies, a special purpose fund that advanced money to litigants against pending legal claims. He had over $300 million across thousands of case investments, collections, and receivables, a staff of almost 50 employees, operating in 40 states. James built, assembled, and motivated a team of who became the leaders in their field of pre settlement funding. The company offered multiple solutions include attorney funding, plaintiff advances, pre settlement and post-settlement funding, and surgical and medical financing, which enable his clients to receive funds for their case, while the await their settlement.

After selling his business, James now operates a consulting firm which specializes in the lawsuit loan industry. He advises companies how to structure their financing, run their operations, deal with legal issues and collecting on their lawsuit loans. In addition to his consulting firm, James teaches business ethics classes and a local university.

James enjoys teaching, reading, writing and spending time with his wife and two boys.