Is your lawyer borrowing costs against your case?
Lawsuit lending has recently come into the spotlight due to its prevalence. Individuals who seek personal injury claims or other lawsuits against negligent parties may have to wait some time for their cases to be resolved. It could take months or years for a case to be sufficiently handled due to all the appeals, evidence examinations, trials, negotiations, exceptions to statutes of limitations, and much more. Therefore, the plaintiff may not see any money for some time. To remedy this, attorneys or legal lenders have allowed plaintiffs to borrow payments against the case. These loans are simple to understand, but they often come with specific details that are crucial to acknowledge, or you may end up getting shafted out of a fair amount of money. Our attorneys at the Downtown LA Law Group can ensure that you know everything there is to know about legal lending and what it involves. Contact us for more information about borrowing costs against your case.
Can my lawyer advance me money personally against my case? Can my lawyer offer loans when I have a case?
The short answer is yes, your lawyer can loan you money when you have a case. Generally, these lawsuit loans are carried out by specific legal companies, not the individuals who are handling your case. The company will examine the case and will make you an offer and an interest rate on the loan. Large lawsuit loans are usually only handed out when there is a very high chance of success with the claim.
Sometimes, an attorney will be the one to lend you the money instead of a legal funding company. If you do not want to incur additional fees, you may be able to simply borrow from your attorney.
Can my lawyer charge me interest in an advance?
The company will charge an interest rate per month for the money you’ve been lent. This interest rate is often between 2% and 4%, but it may vary. This means that the amount of money you owed will need to be repaid at the time of the settlement, plus the total monthly interest rate. Therefore, a loan of $10,000 with a 2% interest rate will, over the course of 2 years, cost you an additional $4800. In total, you would be repaying $14,800 – the initial $10,000 you borrowed and the interest.
Similarly, your lawyer can also charge you interest. However, you should be very careful when agreeing to certain details of these interest rates. Some lawyers will drag out cases on purpose so that they steadily accrue interest fees for your loan. They may purposely want to try and get larger settlements so they can ensure that their cuts will be bigger as well.
How do I pay back a lawsuit loan?
A lawsuit loan is automatically repaid from the settlement you receive. The costs of the case will be deducted first – which may include payment for medical liens and expenses, court fees, processing fees, and more. The remaining amount will then go to the repayment of the loan, and you will receive the leftover amount. This can be quite a shock to some plaintiffs, as they may be expecting large settlements but the numerous fees and expenses paired with the loan and interest could drastically shrink the total.
Bear in mind that the loan is only repaid if your attorney wins your case. If your case is not a success, you will not have to pay back the loan to the company or to the attorney. This is a risk that the lender takes, and partially explains why the costs are much higher. If a lender issues a loan and cannot get repayment, he may be out thousands of dollars.
Plaintiffs should know that they stand to lose a fair amount of money if they opt for an up-front loan. It may be wiser to simply let the case ride out. However, this may not be possible for some people, who could need the funds immediately to pay for various bills and expenses.
Why take out a lawsuit loan?
A plaintiff may need to take out a lawsuit loan because he has not been able to return to work for some time, and thus, he could be earning next to no income. As a result, his day to day expenses and costs could be towering over him or looming closer. Many individuals need to cover various living expenses like food costs, rent, gas money, and more. They may have to pay monthly mortgages, car insurance, phone bills, electricity bills, and other loans. Even some medical bills may need to be paid off quickly.
You should be aware, though, that not every case is immediately eligible for a lawsuit loan. The company or attorney will highly consider whether or not the case will be a success. If there is a likelihood of failure, your loan will not be approved.
Are lawsuit loans and legal lenders regulated?
Federally, lawsuit loans are not regulated by the government. There are various State regulations and rules that have been put in place, but for the most part, things like interest rates and contract wording are not held to a higher standard. The primary reason for this is because the loans are essentially non-recourse; that is, the plaintiff does not have to repay the money he borrowed, as it will be taken with interest from a future sum.
This means that some legal companies may have exorbitant interest rates or may write certain clauses into the contracts that you do not agree with, such as additional payments.
Learning More about Lawsuit Loans with Our Firm
You may have an attorney already or you may have already taken out a loan for your case but your previous attorney dropped it. You can come to our law firm, the Downtown LA Law Group, to learn more about legal loans and to work on your personal injury lawsuit. We will do everything in our power to ensure that you are awarded the maximum compensation under the law, and our aggressive lawyers will stop at nothing to fight for your rights.
Call us today for a free legal consultation. You can reach us 24 hours a day, 7 days a week, 365 days a year. We invite you to ask us any questions you wish and we’ll answer accordingly. All private details, case information, and personal statements will be kept totally confidential, and nothing will be shared outside of our office walls.
If you choose us to handle your case and represent you, we’ll also ensure you pay us no fees throughout the process. We will give you our zero fee guarantee, which says that we only get paid if we win, and if we lose, we take nothing at all. Our lawyers operate on contingency, and the settlement we bring you will be the source for our expenses.
To learn more about lawsuit loans, contact the Downtown LA Law Group today.