Lawsuit Settlement Loan Limits

When you are filing a lawsuit and expecting to recover funds upon completion of the case, a lawsuit settlement loan can use the expected recovery as collateral on a cash advance. This provides you with the funding needed to pay legal fees as you go along. These loans are risky, and they are expensive as a result. Lenders prefer to keep limits low to mitigate this risk.

Chance of No Recovery

Most lawsuit loan contracts promise the debt will not be collected if the lawsuit fails to return the promised settlement. Basically, this means you are off the hook for the debt if you lose the case. Lenders are able to include these terms only because they are extremely cautious in issuing the loans. They will not extend a loan on a case that is not likely to succeed.

Loan Limits

Even if your case is likely to succeed, a lender will not issue a full amount of the settlement expected. Lawsuit settlements are not highly liquid. This means they may take a long time to actually be converted to cash in your pocket. Lenders extend low loan-to-value ratios on collateral that is not highly liquid. Expect lower than a 50 percent loan against the settlement; 30 percent is more likely. 

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