If you’ve been hurt in an accident brought about by someone else negligence, then you can file a personal injury lawsuit. Doing so will help you get a much-deserved compensation. But it could take a very long time before you can get your lawsuit settlement. And as you wait, unpaid medical bills start to pile up and if the injury has caused a permanent disability it means you’ll be unable to work and you could even lose your home and your car because you can no longer pay your mortgage and loans. Before these things happen, it is time to consider applying for a pre-settlement loan. Also referred to as lawsuit loans, this type of loan can serve as your lifeline particularly if you don’t have the money needed to pay your medical and day to day expenses.
How a Pre-Settlement Loan Works
Before you take out this kind of loan, it’s important that you learn as much as you can about it first so you can decide whether it’s a good option for you or not.
Here’s how it works:
- A plaintiff who’s awaiting a lawsuit settlement finds himself strapped for cash because he is unable to work after the accident.
- He then contacts a lender and applies for a pre-settlement loan.
- The lender contacts the lawyer of the applicant and then determines if the case will settle in the plaintiff’s favor and how much the settlement is likely going to be.
- If the lender approves the loan, the applicant’s attorney and the lender will negotiate the terms, including the amount, terms and fees.
- They sign a contract.
- The payment is made once the plaintiff wins the case or is awarded a settlement. If the plaintiff loses the case, he does not have any liability to the lender.
Important Information About Settlement Loans
This type of loan can be very beneficial to you because it provides you the funding you need to pay for your medical bills, living expenses, and others. It saves you from the stress and burden of not having any money after your accident. However, you should only consider it as a last resort. If you can borrow money from your loved ones and friends, do so. If you can take out a loan from your bank or credit union, then by all means, do so. That’s because a pre-settlement or lawsuit loan comes with high interest rates and fees due to the risks that the lender takes upon granting this type of loan.
A pre-settlement loan can prevent you from filing for bankruptcy and losing your home or your car. If you have a solid case then this type of loan could give you the opportunity you need to fight for a much better settlement. Weigh the pros and cons carefully and discuss this matter with your lawyer before opting for this type of loan to ensure that you are making a wise decision.