The personal Injury lawsuit funding not a traditional type of loan, in the true sense. They should be thought of as a cash advance on a potential future settlement. The loan amount is normally only 10% of the expected amount one would receive from a settlement. They are a fairly new product and are not as regulated as traditional loans are. They often have very high-interest rates & “funding fee” structure associated with them. These types of loans are primarily focused on plaintiffs who were injured in an accident, and the injury has negatively affected their income. Common reasons to consider these loans are income replacement, mortgage & rent payments, hospital & medical bills, food & transportation expenses.
How does it work?
The companies that offer these loans will evaluate the personal injury case and the potential settlement or judgment expected in the case. The vast majority of these cases are settled with a monetary payment before ever going to trial. If the company thinks the case is good, they will offer a cash advance on the expected settlement. In exchange, one agrees to pay back the lender the principal, plus a funding fee. Most of the times, no advance re-payment is necessary. It is also important to understand that this loan is NOT from the case attorney. The lender will have to work with the attorney to understand the case, but the attorney is not allowed to loan the money. This obviously requires the consent of the person. There is also a signed agreement between all three parties regarding the pay-out of future settlements. Most attorneys will try to dissuade a client from taking on this type of loan.
Qualification criteria for personal injury lawsuit funding
- Suffered injury as a result of an accident for which the victim was not at fault, e.g., auto/motorcycle accident, dog bites, slip and fall, etc.
- Have hired a personal injury attorney to file a personal injury claim to recover financial compensation.
- Have applied for legal funding with FCA Legal Funding and provided details of the personal injury claim. FCA Legal Funding will contact the lawyer for more information to determine how much legal funding to provide.
One should look at all sources before considering a lawsuit loan. Some other sources might be borrowing money from relatives & friends, disability payments, insurance proceeds, traditional installment loans from a local credit bureau, borrowing against the equity in the home or 401(k) account.