Pre-settlement loans for claimants – Yonkers Tribune.
YONKERS, WESTCHESTER COUNTY, NY – July 17, 2022 – Did you know you can get money for an expected settlement before the court clears the court? Many plaintiffs find themselves at a dead end to get their money, even if they work in the justice system. Pre-settlement loans exist to ease this burden.
What is a pre-settlement loan?
Plaintiffs in a civil lawsuit actively seeking settlement with another party may receive a pre-settlement loan of between $1,500 and $1,000,000 (sometimes more), depending on the nature of their case and the outcome expected. The lender will transfer the funds to the applicant in exchange for a signed agreement that they will receive a percentage of the settlement to repay the loan.
Let’s see an example of how this might work to get a better idea.
- The plaintiff is involved in a civil lawsuit where the lender estimates the expected settlement will be $50,000 after attorneys’ fees.
- The lender agrees to lend the applicant $20,000 upfront with the agreed interest rate.
- The plaintiff accepts the money and agrees to repay $22,000 (loan amount plus interest) when their settlement takes effect.
- The applicant immediately receives the $20,000 in cash.
- The plaintiff pays back $22,000 of his $50,000 settlement when it is received.
The plaintiff received $20,000 instantly. However, they will only refund $22,000 when they receive their settlement. So they pay $2,000 to have instantly freed up money to use right away. This instant cash can be the financial fuel they need to keep pursuing their legal money. It’s worth doing if they believe they will win their case and can move on.
A lawyer must agree
To reduce the risk of someone taking on more than they can afford or assuming they will win their settlement when it is far from guaranteed, an attorney should speak directly with the lender and the client. The lawyer must give the green light to the client to borrow these funds before this is authorized. This requirement exists to ensure that the attorney has given his stamp of approval to the arrangement and that he believes there is a strong likelihood that the settlement will proceed as the plaintiff hopes.
The other important reason lawyers need to interact with lenders before signing a client who receives funds is to show the lender what type of case the client is presenting in court. Also, the lender needs to know what settlement size they are considering in this case before they can suggest a loan amount to offer the customer. After all, they will be flying blind if they don’t know how much settlement is likely to come from this deal.
Given all of these facts, a plaintiff may need to act quickly to get all their ducks in a row so they can borrow the funds they need with permission from their lawyer. The worst thing that can happen is that they end up waiting too long and they run out of money. No one wants this to happen because they should be allowed to present their case to court immediately.