Compared to a conventional lawsuit loan which must be paid back regardless of the loan recipient’s capability to pay it back, a no-risk lawsuit loan is a non-recourse way of funding. This means that you only have to pay back the advance if and when you actually get money from your lawsuit settlement. When you are engaged in a lawsuit, there are four possible outcomes: You may win your lawsuit, you may reach an out-of-court settlement, you may lose the lawsuit or you and your lawyer may choose to back out from the lawsuit. What happens regarding repayment of your lawsuit advance depends on how your situation is resolved.
If you win the lawsuit or reach an out-of-court settlement, your lawyer will pay off your lawsuit loan when he or she disburses the proceeds from the money awarded by the judge. As part of the initial agreement in this situation, your lawyer will take care of all outstanding expenses against your settlement – including lawyer loan- from the proceeds of the monetary settlement, then deliver the remaining amount to you.
If you lose the lawsuit, or you and your lawyer decide to back out of the lawsuit, you keep the advance and the company bears the loss.
While the cost of a no risk lawsuit loan (what’s known as the “risk premium”) is often greater than the interest on a conventional lawsuit loan, it is important to keep in mind that a conventional financial loan has to be repaid – no matter what the outcome of the lawsuit is. If you rely on conventional funding, hoping to use the proceeds of the settlement to pay back the lawsuit loan you owe is risky. If you lose the lawsuit or have to back out of it, you will still need to pay back the financial loan in full. This can create real financial problems if you cannot repay the financial loan installments in time. With a no-risk lawsuit loan, however, you only need to pay back the loan if and when you win the lawsuit or reach an out of court settlement. So, if you do not win, you do not have to pay. Whether you have to pay back the loan or not, , you can still use the lawsuit loan to pay for your living expenses and to substitute for your missing earnings .
Another aspect to consider while trying choosing between a no risk lawsuit loan and conventional funding is the mode of repayment. With a conventional lawsuit loan, you will have to begin repaying your financial loan instantly, even though your lawsuit might not have gone in your favor. With no risk lawsuit loan, all repayment is subject to your winning the lawsuit or reaching an out-of-court settlement. There are no charges or up-front expenses, and there are no per month installments. When you win, your lawyer will deliver a cheque to the company on your behalf as repayment of the lawsuit loan.
Making the right funding choices may impact you for decades to come, so do consider all your choices properly, and do not think twice about getting in touch with lawsuit loan to discuss your choices.