Settlement loans have become more popular by the year in the United States. One of the main reasons is a large number of civil lawsuits in the US court system each year. With a large number of lawsuits in the legal system, it makes settlement loan providers able to loan more money to plaintiffs. Pre-settlement funding is a simple concept; it is also known as legal funding or a lawsuit loan. Basically, a provider or investor will give you a monetary loan based on your lawsuit. 

A settlement loan is an excellent source of financial income for someone in the middle of a pending lawsuit. This is especially true with accident and injury lawsuits since the plaintiff is unable or cannot work during the trial. This in return prevents the plaintiff from getting into too much debt, and even possibly losing their home. One of the most overlooked benefits of a pre-settlement loan is the fact it is a non-recourse loan. This is due to the fact that if you lose your lawsuit you are not required to pay back the loan; unlike with a traditional loan like a home equity loan you would still be required to pay it back.

A settlement loan will not affect the outcome of your pending lawsuit, in fact, due to privacy laws and restrictions, the defendant in your case will not even know that you applied for one, or if you were approved or denied. Even if by some miracle the defendant did find out it has no legal ground or merit in the lawsuit itself. Attorneys also favor settlement loans since it allows the case to go through the full trial and reach an awarded amount granted by a judge or jury; which substantially increases the amount. So, in the eyes of an attorney, they see settlement loans as a way to prolong the case and reach the maximum awardable amount.

Now, pre-settlement loans do have their disadvantages and should be explained to plaintiffs, and most providers will only tell you the benefits and not the negatives. Since settlement loan providers are taking a big risk loaning out money that might not get paid back they do attach interest rates that would normally be given to people with bad or poor credit histories. You'll have no control over the interest rate since your credit history and employment status play no role in the approval process. There is also a one-time fee that is paid back if you win your case; this is different between all providers and depends on the loan amount. 

It's your choice alone if you decide to get a settlement loan, as you can see above you need to weigh out the pros and cons when deciding what's best for you. Speak with your family and attorney before making any decisions. Hopefully, you'll make the right decision that benefits you and not the provider. Remember, we all want money right away, but it's worth waiting a little longer to get what is rightfully ours.

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