In lawsuit settlement loans, the lender will make a loan based on the anticipated settlement so that the plaintiff can stay financially solvent until their lawsuit is settled. Some law suit loan lenders provide a lawsuit settlement loan in exchange for a percentage of the plaintiff’s eventual recovery, but this type of lender is rapidly declining in popularity.

As with most lawsuit loans of this type, the lender will not collect if the plaintiff fails to receive the anticipated settlement, so there is a high margin of risk involved for the lender. If the plaintiff does not win his case, the loan does not have to be repaid. The financer carefully judges the validity of a case and the plaintiff’s potential for future settlement before a ‘non-recourse’ loan is extended.

The kinds of claims that usually qualify for lawsuit settlement loans include auto accidents, medical malpractice, premises liability (slip and fall), commercial litigation, product liability, maritime claims (Jones act), railroad claims (FELA) and personal injury or wrongful death.

Many finance institutions offering lawsuit settlement loans also help recipients by structuring the disbursement of the loan according to individual needs. A client may make use of such a loan personally or have an appointed advocate arrange for one. Lawsuit settlement loans come in handy to cover medical and living expenses, legal fees and other outlays that may be incurred while the plaintiff awaits final settlement of a case.

Owing to the nature of these loans, the lender usually does not conduct a credit check and may not set income requirements to approve a loan. The sole criterion will always be the final amount recovered in the case of favorable settlement for the plaintiff.

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