Pre-settlement lawsuit loans

Learn about what settlement advances are and how they work.

A settlement advance is the financial backing provided to plaintiffs with pending claims and in need of immediate cash. Lawsuit loans or settlement advances are commonly used terms to describe settlement funding. A pre-settlement cash advance is not a loan because the settlement lender does not base the advancement on credit scores or employment status. All pre-settlement funding provided is non-recourse, and the advance funds will be based only on the value the company gives your case. This type of financing is free of risk because you don’t have to pay back the funds if you don’t win your case.

Investopedia describes non-recourse loans very well in this article: “Non-recourse debt is a type of loan secured by collateral, usually property. If the borrower defaults, the issuer can seize the collateral. Still, it cannot seek out the borrower for any further compensation, even if the collateral does not cover the full value of the defaulted amount, especially when the borrower does not have personal liability for the loan.

Recourse debt allows the funder to go after the borrower for any balance that remains after liquidating the collateral. For this reason, lawsuit cash advance companies charge higher interest rates on non-recourse debt to compensate for the elevated risk.”

As with any financial transaction, knowledge is vital. Educate yourself on how lawsuit loans are carried out and always research the funding companies’ background. Always work with a pre-settlement loan company you trust or get a second opinion. This could save you thousands of dollars when your case settles.

Choosing a top pre-settlement funding company will help you avoid less scrupulous firms that take advantage of their clients through high rates and ridiculously high fees. A higher-rated, prestigious legal funding company can provide you with quick access to capital reasonably. The best companies won’t pressure you into signing a contract with them, but instead, if they can’t fund your case, they’ll guide you towards the right moneylender that can invest in your case. The best lawsuit loan companies are transparent every step of the way. This is why you must understand the following:

• Learn how the best lawsuit funding companies work: If a pre-settlement advance company approaches you by mail or text, you should make absolutely sure that it’s a legitimate business before you sign anything. Avoid being a victim of fraud or misrepresentation and learn how the best lawsuit settlement lenders work.
• The best settlement loan companies want to contact your attorney: A trustworthy settlement advance company is always interested in establishing long term relationships with lawyers and will ask to contact your attorney to set up your lawsuit cash advance. If you’re approached by a firm that wants you to sign papers without showing them to your attorney, say, “Next!”
• Top-rated lawsuit funding companies are easy to reach: Plaintiff pre-settlement loan companies know that missing a call can lead to losing business. That’s why a recognized company will have a live person answering the phone, and if you do need to leave a message, they call back quickly.
• The funding terms are crystal clear: The entire agreement should not be more than a few pages long and printed in nothing smaller than a ten-point type. Unscrupulous firms will try to hide extra fees in small font boilerplate pages, knowing that many people don’t bother to read the “small print.”
• Interest rates are reasonable, with little or no compounding: If the legal funding firm wants to charge you over 42% interest, look elsewhere for a better deal. In addition to a high rate, compounding interest can drastically increase the amount of money you owe, sometimes wiping out all the proceeds of your award. The best companies will show you exactly how much you will owe based on when the money is repaid out of your settled case.
• The best lawsuit funding company will take the risk: You should only be responsible for repaying the loan if your attorney collects money for you. If your case is dropped or dismissed, the company does not get reimbursed.
• A high rated pre-settlement loan company wants to talk to you: Getting a loan from your settlement proceeds should never get you the bum’s rush. The best companies will take the time to answer your questions and address your concerns thoroughly.

Same-day settlement loans enable you to quickly obtain the cash you need in less than one business day.

The settlement funding process consists of the analysis of your case for the purpose to underwrite a legal advance through the following three critical factors:

• Fault

The first thing the funding company looks at is fault; all the facts surrounding the incident, as well as the police report (if applicable), or any other supporting documents to verify that the defendant in your case is at fault.

• Injury

In accident cases, the second thing a pre-settlement advance company will look at is injury. Ambulance and emergency room report and any other medical files so that underwriters fully understand the extent of your injuries. If needed, many lawsuit lending companies also provide surgery funding to help you pay for medical procedures as a result of the accident.

• Insurance

Finally, the lawsuit lender will look at the defendant’s insurance coverage. This part is simple: underwriting will ensure the defendant in the case was sufficiently insured to cover the damages and injuries that resulted from the incident.

How does a pre-settlement loan company approve plaintiffs looking to fund their case? 

The approval process consists of the following:

• Your application

A team of pending settlement loan advisors will handle your application’s intake and review. Subject to several factors, you will either be pre-funded by us in-house or with one of our partner firms with a relationship based rate. Your application acceptance will be based on our initial phone call, where you will provide publicly available information about your claim. If interest is expressed, we may require further documentation and require a scheduled call with our attorney. The process begins with the settlement loan company contacting your attorney to find out more about your case so that underwriting can determine whether or not it’s a reasonable risk. Remember, they only get paid if your attorney collects money for you. Since attorneys also work on contingency, there’s a good chance that if your attorney thinks your case is worth investing in, then the funder will agree.

• Your attorney

The company will want to know how the accident happened and how severe your injuries are. Our team will work with your attorney to ensure our underwriters understand your case and get you the most available funding. Baker Street Funding requires you to be represented by a bar licensed attorney and for that attorney to participate in the due diligence process. Remember, the faster your attorney responds to the funding firm’s questions, the quicker your pending lawsuit loan application will get approved.

• Our underwriter

The case review consists of a call with your attorney to address any questions about your case. After that conversation, our underwriter will issue an approval or denial, depending on how high the value of your case is. If approved, we will send out paperwork for you and your attorney to sign.

• Your approval amount

The funding amount will be based on how much money underwriting believes your case will likely settle for. For example, underwriting will not loan somebody $100,000 for a case where the injuries claimed are a strained neck and back with a few visits to a chiropractor. A six-figure loan is only likely for a claim with catastrophic injuries and prolonged disability. The loan offer you receive from most lawsuit loan companies is usually enough to be helpful.

• Your funds

Once you and your attorney sign the funding contract, upon us receiving the signed agreement, you should receive your loan quickly, sometimes the same day. We will immediately distribute the funds in the manner you choose. The money can either be sent by bank wire straight to your bank account or a certified check to the address of your choosing via next-day FedEx. There’s nothing else for you to do until your case is settled. If your case turns out to be more severe than you initially thought, such as requiring surgery or long-term disability, you might be able to get additional funding.

Plaintiffs typically look at other financial options for funding before turning to lawsuit loans. These options could involve bank lines of credit, reverse mortgages, borrowing from friends and family, and other options. While some of these options can carry less interest than a pending lawsuit loan, they can also be based on factors like personal credit and job history.

If you do not have a spotless credit score, then many banks will not lend to you, and most plaintiffs find themselves in a position where they cannot pay their bills. While their credit is negatively affected, they are unable to get traditional financing from banks. Conventional banks do not recognize the proceeds of a lawsuit as collateral; fortunately, lawsuit loan companies do.

Pre-settlement funding companies were designed to provide plaintiffs with upfront money secured against their unresolved or won settlements. Although settlement financing is also known as a lawsuit loan, they are not to be considered loans. Settlement funding is a non-recourse financing contract. Unlike a traditional bank loan, there are no monthly payments and no obligation to repay the money if the case does not settle favorably. There may be fees associated with an advance, but all fees are paid once the claim has been awarded.

Predatory lawsuit lenders.

Predatory lawsuit money lending is the practice that convinces a plaintiff borrower to take ridiculously high payback loan amounts through exploitative methods. There are many pros and cons in choosing amongst the best pre-settlement loan companies in the industry; or the worse. Since pre-settlement funding is a relatively new industry, some places that loan money against court cases may try to take advantage of your situation by promising what they can't and won't ever deliver. The following are real-life scenarios that you will need to consider.

• Unethical sale tactics. One of the annoying scenarios comes when these so-called 'top-rated lawsuit loan companies' guarantee you the world bringing zero results or ultra-high interests as high as 300% a year. To tempt victims into applying with companies that cannot fulfill their immediate needs is unethical.
• Fake reviews. You can also tell if a pre-settlement cash advance company is not trustable when their behavior doesn't match the reviews. And so is the offshore marketing used to tempt victims into applying or signing with companies that cannot fulfill your immediate needs while maintaining the outcome of your matter safe.
• The pressure game. If you ever feel like the funding company uses high-pressure sales tactics to get you to close on a transaction that you don't understand, acknowledge that these are manipulative methods and that the rates will probably go out the roof. You can always walk away from them and call someone else.
• Illegitimate firms charge outrageous rates. Many lawsuit funding companies that claim to provide low-interest rates charge excessive rates. Some of these firms say one thing over the phone and show you a different number on the contract. You have to be very careful with this tactic. Knowing what your rate is and what is on your contract is imperative. While pre settlement funding rates can be high, make sure the settlement lender you work with clearly explains the agreement to you.
• The owners are disguised under different names. It has been found that some of these firms had the other name before, got sued, lost, and re-started under a different name and are still practicing the same deceiving methods. Be extremely careful. Always research the funder and their past. You will be surprised by what a search will tell you.
• Funding should not take more than 48 hours. Lawsuit funding should take 24-48 to get you funded. There can be complications with your that can make the process much longer, but if your attorney is responsive and the funding company is dragging their feet, keep looking.

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Baker Street Funding specializes in funding plaintiffs with speed and professionalism. Having been recognized as one of the best legal funding companies in the market, we were established to help you find the right financing program through a non-invasive approach.

• A top-rated funding firm: Baker Street Funding has been recognized as one of the best lawsuit funding companies nationwide by various news outlets. You can search for us to learn more. Having acquired high ratings, we let our reviews speak highly of what our company does and provides.
• Convenient funding: Baker Street Funding helps plaintiffs find the most convenient lawsuit financial solution in their time of need. We work with some of the best former personal injury attorneys in America to evaluate your case and provide you with the financial support you need in the fastest time available.
• Company regulations: Baker Street Funding does not intervene with your relationship with your attorney or your lawsuit settlement or verdict outcome. We are committed to providing you with non-invasive treatment, no harassing calls, or marketing emails.
• Work ethics: Baker Street Funding has the quickest turn around times in the industry than other companies. If it is important to you, it is essential for us. We provide plaintiffs with rapid lawsuit loans at the lowest rate possible.