Loans come in several different types, including line-of-credit and collateral loans. However, one funding option with the word loan in its name does not behave at all like a traditional loan. Meet the non-recourse loan. This option can be an excellent choice for individuals who are in the middle of a personal injury lawsuit and waiting for their case to be resolved.
These are people who have been injured due to another party’s recklessness or negligence. In order to hold the negligent party accountable, these victims have filed lawsuits in the civil court system to seek compensation for medical costs, lost income, and the suffering and pain resulting from the injuries.
However, the legal process does not get cases resolved overnight. There could be a long wait before the injured parties ever see a check. During this interim period, many plaintiffs find themselves floundering financially after losing their jobs or missing a great deal of work due to the accident. If this sounds like your situation, the information provided here about non-recourse legal funding may be the exact answer to your dilemma.
Non-Recourse Lawsuit Funding Explained
Lawsuit funding makes available cash advances to individuals who have suffered personal injury from someone’s negligence and have filed a lawsuit to recover damages. If the injured individuals do not receive any financial compensation from their cases when completed, no money is owed to the legal funding company that provided the cash advance. Non-recourse means the company is not allowed to seek repayment by going after other assets belonging to the injured parties. If the lawsuits are not won or settled in the victims’ favor, the legal funding company does not get repaid.
With a traditional loan, the lender requires the borrower to offer something of value as collateral that the lender can seize if the borrower defaults and does not repay the loan. For example, when an application is made for a mortgage, the house becomes the collateral. When an application is made for a car loan, the automobile becomes the collateral.
However, non-recourse legal funding uses the lawsuit itself as collateral, based on the expectation of a settlement or jury award in the future. If the lawsuit is won, the lending company collects from the settlement proceeds the amount that is owed for the cash advance. If the lawsuit is not won, the injury victim does not have to pay back any money at all.
No Credit Check is Required
One major plus to non-recourse legal funding is the fact that no credit check is required. There is no credit score to meet, and it doesn’t matter what one’s credit history shows. There is no worry even if a bankruptcy took place in the past.
The lawsuit itself is the main factor that determines approval for this legal funding. The lender and attorney will communicate to make an appropriate evaluation of the case’s strength. This information forms the basis for determining whether the case merits a non-recourse loan.
Plaintiff Decides the Amount to Accept
After being approved for a non-recourse loan, the accident victim is notified of the level of finances being made available. The figure can range anywhere from $500 up to a few thousand and varies based on each individual case. Of course, no one is forced to take the maximum amount. As a matter of fact, it is wise to only take the amount needed. The money can be used for any purpose the plaintiff feels necessary and helps provide a good financial buffer while the lawsuit weaves its way through the court system.
If Case is Already Resolved, Cash Advance Can Still be Acquired
As discussed above, pre-settlement loans help plaintiffs while cases are pending. However, in situations where a lawsuit results in a structured payment format, the injury victim does not receive the full settlement amount at once. Instead, payments are spread out over a length of time.
This scenario could lead an injury victim to request a non-recourse loan if, for example, another surgery is needed. The structured payments being received periodically in this dispersed manner may not sufficiently cover the cost of the operation. By taking a non-recourse loan, the individual can use the lump sum received to pay for the necessary surgery.
Differences Between Pre-Settlement Funding and a Loan
Technically, the use of the term “loan” when referring to pre-settlement funding is a bit deceiving, as mentioned above. A loan is typically made by borrowing money from a lending institution like a bank or credit union. Arrangements for repaying the loan usually involve monthly payments with interest. In the case where a borrower runs into difficulty making these payments, the following may occur:
- Credit Score is Affected – Failure to repay the loan at exactly the times specified in loan documents can result in a negative effect on one’s credit score. This may adversely affect the ability to borrow funds in the future.
- Forced Sale of Asset – Depending on the loan’s structure, the lending institution could have the right to force the sale of the borrower’s car, home, or other assets to collect the funds owed.
By choosing a non-recourse pre-settlement loan, the injured party finds an entirely different financing climate. The legal funding company is giving an advance, not lending to the individual. In essence, the company is buying a portion of the lawsuit’s expected proceeds in exchange for money. There will be no monthly payments required.
After the lawsuit is resolved, the legal funding company gets the agreed-upon amount of settlement proceeds previously purchased. The plaintiff’s attorney gets his or her fee, and the accident victim then gets the remaining amount in either a lump-sum payment or a structured settlement form.
If something should happen that causes the lawsuit’s claim to be denied, the plaintiff is not required to pay back the cash advance. The funding company provided the funds on a non-recourse basis, so the money still belongs to the accident victim.
Get Financial Assistance Now
While you’re waiting in limbo for a legal settlement or the completion of an injury lawsuit, there is no need to suffer financially nor stress over how to make ends meet. The Legal Funding Group has helped vast numbers of people in the same situation as you. Today, these individuals are enjoying the peace they have obtained through a non-recourse pre-settlement loan.
Contact us right away and you could potentially have the non-recourse lawsuit funding within 48 hours.