What Are Settlement Loans and
How Do You Get One?
Are you involved in a personal injury or property case and waiting on a settlement? The entire process can take as long as 3 years before you see any money.
People who lost their homes and suffered property damage and business loss in 2018 are still waiting for a $13.5 billion settlement to be approved. They don’t expect to see a settlement check for quite some time.
You still have financial obligations to meet, even though you know you have money on the way…eventually.
Settlement loans are a way to bridge the gap if you are financially stressed and you have bills to pay. Keep reading to find out what settlement loans are and if it’s smart to get one.
What Are Settlement Loans?
Settlement loans came about in the 1990s during a wave of tort cases. These are cases that are civil suits to hold people accountable for negligence.
For example, PG&E was negligent in maintaining its electrical equipment, which resulted in destructive wildfires. Doctors can be found negligent in malpractice cases. Drivers in car accidents can be found liable for injuries as well.
In these examples, the person who suffers damages can get a financial settlement for the damages suffered. These cases can take years to settle.
During that time, a person may be out of work and has medical bills to pay. They may need funds to rebuild their home. There are still financial pressures that need to be taken care of. It can be hard to do so because they’re waiting on a settlement check.
Settlement loans give you financial relief in this situation because you get the funds before your settlement check arrives. That allows you to pay your bills while you wait for your attorney to complete the case.
How Does a Settlement Loan Work?
Here’s how a settlement works. You file your civil case and your attorney is negotiating a settlement for your case. You apply for a settlement loan.
The settlement loan company will evaluate your case and determine if they should complete the loan or not. They will probably ask your attorney for a lot of documentation regarding the merits of your case.
Once your loan is approved, you receive the loan, which you can spend on whatever you need. You can pay your rent, mortgage, groceries, or medical bills. The loan is paid back once you receive your settlement check.
Deciding to Get a Settlement Loan
A settlement loan sounds like a good deal and can get you through a tough financial time. Before you start filling out your application, you should know that there are pros and cons to getting a settlement loan.
The advantages are that you get money fast and financial relief. That can take the pressure off of your attorney and they can take more time to fight for a better settlement.
One of the cons of a settlement loan is that they could have high fees, which can lower the amount you get in the settlement after you pay your attorney and the loan. You could wind up with very little to show.
You have to be careful when getting a settlement loan. There are a lot of companies ready to take advantage of you in a desperate situation. You want to be aware of the scams associated with settlement funding loans before you get one.
It’s not an easy decision to make. You’ll want to speak with your attorney and let them know what your financial situation is. They can advise you of your options and help you obtain a settlement loan.
How to Get a Settlement Loan
Did you decide that a settlement loan is the best way to handle your financial situation? You’re going to have to start the settlement loan process by knowing how much you need. Start off by having a budget in mind before you begin searching for lenders.
You want to have a budget that will cover just what you need. Keep it down to the bare minimum. Remember, you’re going to pay interest and fees on top of the loan.
Find a Settlement Loan Lender
Finding a reputable lender for settlement loans is a challenge since there are plenty of companies looking to take advantage of you. Look for lenders that require you to bring your attorney into the process.
Reputable lenders want to work only with your attorney because your attorney can tell the lender if you’re likely to win a settlement and for how much. Your attorney will forward documentation about your case to the lender for review.
Read the Entire Contract
You and your attorney should review the entire contract to understand the terms of the loan. You’ll want to know when interest and fee payments are due. There are times when a settlement takes a while but you still have to pay interest and fees before you get your settlement check.
You also want to know what happens if you lose your case. Many lenders won’t require the loan to be paid back. There are still some lenders that expect to get paid no matter what.
Settlement Loans Can Help You When You Need It Most
Any type of civil, personal injury, malpractice, or property case could take years before you see a penny. You could be in a situation where you’re out of work or you have medical bills to pay even though your case is pending.
Settlement loans are a viable option if you find yourself in this situation. You want to make sure that you work with your attorney to get the right loan for your financial situation.
You can get peace of mind knowing that your finances are taken care of. Head over to the home page of this blog for more personal development articles.