Yes, a lawyer can help with a pre-settlement loan for your case, as legal funding providers typically only accept loan requests from applicants that have already hired a lawyer.
A lawyer can help you determine if seeking out a pre-settlement loan makes sense for you. They can also guide you through the entire legal process, handling litigation tasks for you.
What Is a Pre-Settlement Loan?
Also known as lawsuit loans or litigation funding, a pre-settlement loan is a type of loan wherein the funding provider will let you borrow money equivalent to a portion of what the court will likely award you if the case settles favorably.
As lawsuits can take months or years to reach a verdict, the pre-settlement loan helps cover the costs accrued due to damages such as medical bills or lost wages.
Once you recover a settlement from the lawsuit, the amount you borrowed plus any extra fees and interest charges will go back to the lender.
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How Does a Lawyer Help With Pre-Settlement Loans?
When applying for pre-settlement financing, the lawyer can provide details of your injury case to the funding company. These can include medical records and other pieces of evidence. It allows the lender to determine your chances of settling the lawsuit and how long it might take to reach a verdict.
If you win the case, the attorney can also coordinate with the lawsuit loan company in distributing the settlement amount.
What Factors Affect a Pre-Settlement Loan’s Approval?
Unlike a typical loan, pre-settlement loans do not require credit score and credit history checks. Instead, the funding company will review the case itself using the details provided by the lawyer. Some of the case factors they consider include:
Type of Lawsuit
Pre-settlement loan providers generally approve requests for personal injury actions such as car accidents, product liability, and slip and fall cases. This is because you would typically recover such a settlement in cash, making it easier to distribute the money accordingly.
Potential Settlement Amount
The pre-settlement loan company will also assess the case’s possible settlement amount. They need to ensure that the total recoverable damages will sufficiently cover expenses such as:
- The borrowed loan amount and interest charges
- Attorney fees
- Court and filing fees
Furthermore, pre-settlement loans are usually risk-free, which means you do not have to pay the lender if you do not win the case—but that also means the loan company has a higher risk of losing money.
As such, they will consider any fault percentage placed on you, as Indiana’s comparative fault law can reduce your recovery if you are partly liable in the case.
You also cannot recover anything if you are more at fault than the other party in the case. If the amount deducted from your total damages is too high, you might not be able to repay the loan. The loan company may reject the application to avoid losing money.
The Lawsuit’s Status
Pre-settlement loan companies will typically require the lawsuit to be active in court first before they consider approving your loan request. When a case has already gone through court proceedings, it can reassure the lender that the suit could settle. They may not be confident about funding a case that you have not yet filed.
The Attorney’s Cooperation and Experience
The lawyer you work with is another factor that the pre-settlement loan provider considers when approving your loan request. They may prefer a legal team that not only has years of experience in settling lawsuits but has also worked with previous loan providers and is willing to cooperate with them.
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Can a Lawyer Advise You Against Taking a Pre-Settlement Loan?
Attorneys are duty-bound to guide you through the litigation process and recommend the best course of action based on your situation. As such, if the lawyer reviews your case and believes that taking a pre-settlement loan will not be in your best interest, then they can tell you so.
For instance, the lawyer may advise you against applying for a pre-settlement loan for a car accident case if you are still undergoing medical treatment. Since your injury-related costs are still accumulating, taking a loan now could mean your future expenses would not get covered. Instead, the lawyer could suggest holding off on your decision until they can make a final calculation of your damages so you can modify your loan request amount.
Of course, the choice to take the pre-settlement loan or not still depends on you in the end.
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Sevenish Law Firm, P.C. Can Help You With Your Injury Case
Now that you know a lawyer can help with a pre-settlement loan for your case, do not hesitate to call one for help. At Sevenish Law Firm, P.C., we understand that injury lawsuits can take time to settle. This could strain your finances if you pay out of pocket. That is why we are ready to cooperate and advise you on your case if you search for other funding options. Furthermore, our Indiana injury attorneys work on a contingency basis, which means we only charge fees if you win.
Our team only works with personal injury clients throughout Indiana. We are available 24/7 for your concerns, so you can call anytime for a free consultation.