A Lawsuit loan is a type of pre-settlement funding designed to help you pay your bills when involved in a personal injury lawsuit. In reality, the cash isn’t really a “loan” but rather an advance. It’ not considered a loan because you do not make monthly payments on it, and you do not pay it back unless you win your personal injury case.
From the standpoint of the company giving you the money, the cash that you receive is considered and “investment” or a kind of venture capital. They take the risk of giving you the money in exchange for a payback if you win your case
Are there better lawsuit financing options?
Depending on your credit and finances, you may have other options for funding your lawsuit and personal expenses. For example, you may want to get a credit card cash advance or home-equity line of credit. Unfortunately, as you may have already found out, these types of funding sources are drying up in today’s recessionary economy. Also, credit card advances and home equity lines require monthly payments. Lawsuit loans do not require a payment until after you win your case. Thus, they will not be a drain on your current finances.
Using a pre-settlement loan to your case is advantageous because it poses no risk to you. For example, in the event of your lawsuit settling for less than the amount sanctioned by the cash advance, or in the event of the defendant ultimately prevailing, you do not have any obligation to the company funding the lawsuit.