Common Misconceptions About Lawsuit Loans

If you are in the middle of a lawsuit, you may realize that your finances are dwindling and your stress levels are increasing. You are probably trying to figure out how you will cover your bills while you wait for the outcome of your case and monetary recovery.

A loan on a lawsuit is a way to get money quickly while waiting for your lawsuit settlement. Only once you settle do you repay the lender back with interest.

Lawsuit loans are a great way to cover expenses while waiting for your case to settle. They can relieve the stress of having bills pile up. But many people don’t choose to get a lawsuit loan due to several common misconceptions. We will address some of these common misconceptions so you can confidently decide whether to apply for a lawsuit loan. 

What Is Pre-Settlement Funding or a Lawsuit Loan?

Pre-settlement funding or lawsuit loans are types of legal funding. They provide the plaintiff with a cash advance against the compensation they expect to get from a lawsuit. The lending company gives the plaintiff money now in exchange for being paid once the case is over.

The advance amount is typically based on the lending company’s assessment of the plaintiff’s case and the expected outcome. 

The lender is repaid from the settlement funds after all other expenses (attorney fees, court costs, etc.) are paid out of the settlement. 

Misconception 1—I Must Have Good Credit to Get a Lawsuit Loan

People commonly think you must have good credit to secure a lawsuit loan. This misconception stems from the fact that good credit is typically useful in obtaining traditional bank loans. Lawsuit loans operate differently. There is no credit check for a lawsuit loan because the repayment comes out of your settlement or jury award, not out of your personal finances. 

Misconception 2—If I Lose My Case, I Must Pay Back the Loan

Lawsuit loans are nonrecourse. This means that if you lose your case, you are not obligated to pay anything back. This is a risk that the lender takes on and is part of why some of the funding fees may be higher than for some other kinds of loans. In addition, if your settlement amount is less than you borrowed, you won’t be expected to pay more than your settlement.

Misconception 3—Lawsuit Funding Is Expensive

Some people avoid securing a lawsuit loan because they believe that pre-settlement funding is expensive. Lawsuit loan companies do charge fees, but they are most frequently structured as non-compounding interest and are payable only if you secure a successful settlement.

Our mission at Ally Lawsuit Loans is to offer the lowest rates in the industry and to be fully transparent about the rates with all of our clients. Your interest rate depends on the nature of the case. The stronger your case is, the lower your interest rate will be. 

Misconception 4—Lawsuit Loans Are Only for Personal Injury Cases

Lawsuit loans are not just for personal injury cases. Personal injury cases might be the most common type of lawsuit people use lawsuit loans for, but various other cases are eligible for advance funding. Some other types of cases we offer pre-settlement funding for include:

• Workers’ compensation,
• Wrongful termination,
• Product liability,
• Employment discrimination, and
• Defective drugs and medical devices.

If you need financial support while your lawsuit is pending, talk to our lending specialists to explore what funding options are available regardless of the kind of case you have.

Misconception 5—Pre-Settlement Funding Must Be for Certain Expenses

People often think that the pre-settlement funding they receive must be spent on the expenses related to their claim, like medical expenses, lost wages, and property damage. The funds can be used for those purposes, but there are no restrictions on what the money is used for. You can use your lawsuit loan advance to pay rent, mortgage, bills, groceries, school tuition, and more.

As soon as you receive the money from the lender, it’s yours, and you can spend it however you deem appropriate for your situation. The money is intended to help ease the financial burden of expenses accruing while you wait for your settlement.

Contact Ally Lawsuit Loans Today 

If you are worried that you might be unable to keep up with your bills while you wait for your lawsuit to settle, consult with our Ally Lawsuit Loan specialists. We can assess your case and determine the amount we can give you in advance and what the rates will be. We pride ourselves on being upfront and transparent with our clients.

Don’t wait for your bills to pile up and stress you out; let us lend you the money while you wait. If you qualify, we will deliver the cash within 24 hours of funding approval. Contact Ally Lawsuit Loans today for a quote today.