Considering a "Lawsuit Loan" - They are not technically loans
If you’ve been injured in an accident and need cash to cover expenses you may be searching for a lawsuit loan. While a lawsuit loan is the most common search term for plaintiffs looking to borrow money against their case, it is not actually a loan.
You may be wondering if you borrow money and have to pay it back, how is it not a loan? Well, in the event that you lose your case, you won’t have to pay back the money you borrowed.
First and foremost it’s important to note that while the term “lawsuit loans” is commonly used to search for pre-settlement and post-settlement funding, they are not actually loans.
There are several differences between traditional loans and pre-settlement funding. According to Merriam-Webster the definition of a loan is “an amount of money that is given to someone for a period of time with a promise that it will be paid back.”
A loan is a transaction between two parties, a borrower and a lender. The lender agrees to give the borrower money for a specific period of time. The borrower agrees to pay the lender both the principal and interest for use of the money over that period of time.
A loan comes with several stipulations. The borrower must pay back the loan in periodic payments, usually monthly like a mortgage payment or car payment.
The borrower must show the lender proof of income, put up collateral (like a home or car), and take out insurance on the collateral in the event of damages (like a fire or car accident).
The borrower must show the lender that they are credit worthy. The lender will look at the borrower’s credit score to see if they are capable of paying off other liabilities, like credit cards and other loans.
Pre-settlement funding is also a transaction between a borrower and a lender. The lender agrees to give the borrower money before or after their settlement is resolved. However, the borrower agrees to pay the lender both the principal and fees only if their case settles. For this reason pre-settlement funding is considered non-recourse and not considered a loan.
Because the repayment of pre-settlement funding is contingent upon the plaintiff’s case settling, there are no monthly payments, collateral, insurance, or credit checks required.
A lawsuit loan is a great tool to help you get through a financial rough patch after an accident until you’re able to return to work. If you’ve been injured in an accident and need cash to cover expenses we can help. To apply for a lawsuit loan call Bridgeway Legal Funding at 800-531-4066 or fill out the application on our website BridgewayLF.com.