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Pre-Settlement Loans

Pre-settlement loans are exactly what the name implies – cash payments to plaintiffs given in anticipation of a favorable settlement. Pre-settlement loans fall under the ‘non recourse’ category of legal loans, meaning that the extender of the loan has no recourse to collection of the money in case the plaintiff’s case is not settled favorably.

Such loans are either paid in full before or during the lawsuit process or extended in monthly payments. This usually depends on the recipient’s convenience, though it is generally agreed that monthly payments allow for better financial management.

A plaintiff is eligible for a pre-settlement loan an official lawsuit has been filed to claim for damages incurred by the negligent acts of others, or if they have suffered injury or loss at the workplace during the course of employment.

They are also extended when the case involves a matter of wrongful death, or when a person’s death is caused by the negligent or intentional act of a wrongdoer. In such cases, the plaintiff holds a certain person, corporate body or government entity responsible for the death of another. Close relatives of the deceased, sometimes under constrained financial circumstances, may launch wrongful death cases. In such cases, a pre-settlement loan can make all the difference.

Financers who extend pre settlement loans bank on the plaintiff’s case being settled before the usual legal process is complete. If the case is open-and-shut or unlikely to be resolved in the defendant’s favor, the defendant’s lawyer will advise for ‘settlement’ – meaning that time and money is saved on a foregone conclusion. When this happens, pre-settlement loans are recovered with interest.

It is advisable that a plaintiff shops around for the best possible interest rates on pre-settlement loans (or any other kind of legal financing), since these vary from financier to financier. It is a very bad idea to accept the first offer that comes along.

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