Why Litigation Funding Won’t Put Plaintiffs in Debt

Disclaimer: Consumer legal fundings and advances are not loans under applicable financing laws. Rockpoint’s products are non-recourse, meaning if you don’t win your case, you don’t have to pay us back. Receiving financial support in connection with a legal case is typically (and oftentimes incorrectly) referred to as a “lawsuit loan” or “loan.” Therefore, for the ease of search references, these terms may be used in this context to refer to our funding products, but we maintain our separateness from consumer loan products in all legal aspects.

Perhaps you’ve had a motor vehicle accident or a vicious dog bit you. Your lawyer says you’ll probably get a nice settlement that’ll fully cover your damages. Unfortunately, that settlement likely won’t arrive for weeks or months.

This is a big problem when you have medical bills and lost wages to worry about. You’ve heard about litigation funding and how it can help, but you shy away from applying because you think it’ll put you in debt.

However, litigation funding doesn’t put plaintiffs in debt like other types of lending. Learn why this is so below.

What Is Litigation Funding?

First, what exactly is litigation funding? You might see this funding referred to as “lawsuit loans,” but this term isn’t quite correct. Litigation funding is a cash advance on your settlement and not a loan in the traditional sense.

Litigation funding can be extremely helpful when waiting for your case to settle. For instance, if you can’t work because of a premises liability accident injury, you can use litigation funding to tide you over until your settlement arrives.

Litigation funding companies don’t restrict what you can do with the money. You could use your funding to:

• Pay for your rent or mortgage
• Buy groceries
• Cover utility bills and credit card bills
• Pay for school tuition
• Cover medical expenses
• Hire in-home care if you’re too injured to cook and clean
• Repair your car

Additionally, litigation funding can give you the resources you need to hold out for a fair settlement. Without this funding, you might accept a settlement that’s far too low because you don’t have time to wait for more money. But if you have funding, you can bide your time while your attorney negotiates for a fair deal.

Why Litigation Funding Won’t Lead to Debt

Litigation funding doesn’t cause debt because it’s “non-recourse.” What this means is that you don’t have to pay the money back unless you win your case. When you do win, the funding company takes repayment out of your settlement.

Legal funding doesn’t require upfront costs or monthly payments, so you don’t have to worry about how much you owe until after your case is over.

Legal funding companies don’t perform a hard credit check when you apply for assistance. That means your credit score won’t take a hit like it would if you were to apply for a traditional loan.

Other Types of Lending Can Put Plaintiffs in Financial Peril

Traditional loans can spell big trouble for financially challenged plaintiffs compared to legal funding. If you were to take out a loan, here’s what might happen:

• You go loan shopping. Each lending company you apply with performs a credit check on you, which dings your credit score by a few points.
• At first, you might not have trouble making loan payments. But if your case drags on longer than expected, you might struggle with repayment.
• In desperation, you may take out yet another loan to help you pay off the first one. This leads to a vicious cycle of lending that’s tough to break.
• You expect to win your case, and when that happens, you think you’ll be able to pay off all your loans. If you lose, though, you’re in deep trouble. You’re stuck with those loan payments and have no settlement on top of that.

Payday loans are especially dangerous. Lending companies advertise them as a “fast and easy” solution to your money woes; however, they’re anything but.

Payday loans can have massive interest rates of 150% to a whopping 300%. So, if you borrow $1,000, you might have to pay back $1,500 or more.

As you can see, payday and traditional loans aren’t worth the risk. It’s much smarter to use litigation funding because it will never put you into debt like other types of lending will.

How To Get Litigation Funding

You’ll have to meet a few requirements if you want to pursue litigation funding. First, you must have an active lawsuit, and you must have hired an attorney to represent you. This is because you stand a better chance of winning your case if you’ve retained a lawyer.

You must also have a qualifying case type. Rockpoint Legal Funding provides funding for these personal injury cases:

• Car accidents
• Bike accidents
• Pedestrian accidents
• Slip-and-fall accidents
• Dog bites
• Catastrophic injuries (traumatic brain injuries, paralysis, amputation)
• Wrongful death

If you meet these requirements, all you have to do is apply for funding. We’ll review your case and, if everything looks good, you could have funding on the same day that you apply.

See Whether You Qualify for Lawsuit Funding Today

Litigation funding is a smart way to get the money you need without going into debt. If you’d like to learn more about our funding process, call Rockpoint Legal Funding at (855) 701-8506 for a free consultation.