5 Tips before Applying for a Loan for Lawsuits

Some lenders are willing to extend a loan on a lawsuit that promises a future payment. Essentially, the lender is giving a cash advance secured against the suit's settlement in order to provide you with money to pay legal fees. This is not always easy to achieve, and many traditional lenders do not offer the option. The loans are considered very high risk, so you should be informed about the dangers of these loans prior to proceeding. 

#1 Consider Alternatives First

If you are attempting to settle a civil lawsuit, you may consider using a lawyer that only charges for services on the back end. Typically, law offices handling billing in this manner will take on small cases that do not require much time in litigation. It is not common for a lawyer to take on a months' long case without requiring any upfront fee. However, if you are suing for a relatively small amount in a small claims court, a lawyer may offer to charge you only if he or she recovers.

#2 Research Lending Laws

Not all lawsuit loans exemplify predatory lending practices. However, many do. If you are going to get involved with high-risk lenders, you should know what to look out for. Never pay an up-front fee on a loan in order to "join" or become a "member" of a lending service. Never agree to undisclosed fees. Finally, be wary of any lender offering no-credit-check loans. These lenders may have less than ethical lending practices, meaning you will be better off going elsewhere.

#3 Prepare Your Credit

Even if you have a great chance of recovering a settlement from your lawsuit, a lender cannot take a chance on this opportunity alone. The lender will still run a credit check, review your asset history and consider the number of other outstanding debts you have open. If you have bad credit, lenders will be hesitant to extend this loan to you even with the collateral of the pending settlement.

#4 Address Criminal Background

Your settlement depends on the results of your court case. Even though the case is likely taking place in a civil and not criminal court, your criminal background could have an impact on the result. A lender will run a background check, and any criminal activity in your past may be called into question. There is nothing you can do to change your criminal record. You can, however, address these issues up front so a lender is not surprised by them.

#5 Calculate for Fees

If your loan application is approved, you will quickly realize the expense of the loan can be extremely high. Interest rates on lawsuit loans can cut your settlement in half. How much would you be willing to pay so you can get a loan to file this lawsuit? Remember to add the interest charges to legal fees to truly understand how much this lawsuit will cost you. Only go through with the loan if the settlement justifies this very high expense. 


Improve Your Credit Score - Free Consultation