It usually takes some time before a settlement is arrived at for a lawsuit filed by a victim of personal injury. This also means that the compensation or award that they are entitled to also takes a while. When this happens, most plaintiffs usually opt to get lawsuit loans. Before the lawsuit is settled, the plaintiff has a lot of expenses such as living costs and medical bills that they need to cover which is why they usually go for lawsuit loans. Seeking lawsuit loans from financial institutions will help the plaintiffs with their expenses as they await compensation. Lawsuit loans are also sought after by lawyers to provide them with the necessary money when a case is in court.
Business development and marketing, trial costs, general expenses, litigation support as well as expenses incurred for hiring expert witnesses are some of the expenses that lawyers cover using lawsuit funding. Lawsuits can even go for years without being settled and during this period, the plaintiff has a lot of expenses they need to settle. Since they are injured, these people won’t be able to work in order to gain any income which is why they really need lawsuit funding. Plaintiffs who seek lawsuit funding are required to pay it back once they are awarded after a settlement if reached at.
It is only in the course of being awarded that a plaintiff is required to pay back the money to the financial institution as it is usually non-recourse. During settlement of a lawsuit, one might receive less payment than they anticipated and they are only required to pay back the same amount to the company. There are fixed fees charged on these loans by the companies that offer them before the settlement of the lawsuit. Lawsuit funding before settlement of a lawsuit is usually not legal in all states. When the chances of the loans eating up the compensation from a settlement, the companies offer higher fees on them.
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These companies also offer post-settlement loans to those plaintiffs who have not yet been awarded. Plaintiffs go for post-settlement loans as the court might take very long to compensate the victims. This happens when the defendant makes an appeal to the ruling to be given more time in order to settle the award. During this time, the plaintiff is in need of money for their daily expenses which is why they go for legal funding.
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Every state as post-settlement loans as legal unlike pre-settlement ones. However both loans are non-recourse as plaintiffs can only pay back the loan once they get their compensation and the reverse is also true.