Hawaii Lawsuit Funding
Numerous synonyms are used interchangeably for lawsuit loans. Some of the most common synonyms include settlement loans, lawsuit financing, pre-settlement funding, and lawsuit lending. These synonyms are used interchangeably to refer to cash advance given to plaintiffs to help them remain financially afloat as they await settlement of their claim.
Pre-settlement funding is non-recourse
lawsuit funding is different from the typical bank loans in many ways. Firstly, it is considered as non-recourse, meaning that they are not subject to the normal underwriting rules. Also, the fees associated with lawsuit loans are not paid upfront. Instead, the fees is rolled into the advanced principle and they are paid if the lawsuit concludes successfully.
Lawsuit loans expose you to very minimal risks. The lending company bears all the risks while the plaintiff assumes little or no risk. If you lose the case, or if the settlement is less than what you borrowed, you will not be required to pay the lender anything.
What about traditional bank loans?
There is no doubt that applying for a traditional bank loan is a better idea than going for a lawsuit loan. Bank loans are usually cheaper and they are more common than lawsuit loans. However, it is more difficult for most of the plaintiffs to access funding from these sources. But why?
For a bank to approve your loan application, you will need to prove that you are capable of paying back their money. These lenders will ask for collateral in the form of non-liquid assets such as real estate, bonds, and stocks. While some plaintiffs may have the right collateral to access these loans, others may not even have a good credit rating to qualify.
Most of the banks will perform thorough credit checks on every loan applicant before they can approve their loans. Unfortunately, some plaintiffs may have suffered severe injuries that prevent them from working while others may have lost their jobs. In such cases, lawsuit funding seems to be the only hope for the plaintiff to remain financially afloat as they await settlement of their claim.
What other financing options can the plaintiff consider?
If you have suffered injuries from an accident, you will need money for medical bills and the daily household expenditures. Initially, you may pay your bills from personal savings, borrowing money from a family member or friend, credit card, or even taking a loan against a 401k. Ideally, you should consider these financing options before applying for a lawsuit loan.
Why do people consider lawsuit funding despite being an expensive option?
Currently, most of the average American families have less than $5,000 in savings. This amount is adequate for meeting minor emergencies and living expenses for a few months. However, this amount is not sufficient to cater for major emergencies such as accidents or even losing income. The extensive medical bills, litigation fees, and daily expenses can easily deplete these reserves. On the other hand, the traditional lenders will lock you out because of a poor credit rating or because you no longer have a reliable stream of income.
Remember that even when you deplete your reserves, the bills will still keep coming. When you get to such a point, you may consider lawsuit financing to help you manage your financial obligations. You can apply for lawsuit funding if you expect your settlement to delay for several months. If you anticipate a quick and fair settlement, then you should wait for the payment and not apply for lawsuit funding.
How long does settlement take?
Currently, most of the personal injury claims take about two years to settle. Workplace discrimination, medical malpractices, wrongful termination, and several other cases may even take longer. If the case crosses the state line, it may even stretch on and on.