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You may have heard the term plaintiff funding in the past. It’s most commonly referred to as legal funding or lawsuit cash advance. The term describes a form of borrowing and lending that is contingent upon a lawsuit. Plaintiff funding comes in varies forms. A person if qualified, may borrow against a lawsuit that has not yet settled. This is most commonly referred to as pre settlement funding. If a person is qualified to borrow money against a case that has already settled, it is most commonly referred to as post settlement funding.
First and foremost the only way you can borrow money against a lawsuit is to be the plaintiff in the case. This means you are the one that is seeking compensation from a personal injury or a commercial litigation suit. A plaintiff must also be represented by a licensed attorney. If you are not the defendant in the suit or representing yourself (pro se), a lender will not allow you to borrow money against your case.
Approving an applicant:
The approval process may be different for each company. A company that lends money against pending or settled claims employ or hire underwriters to evaluate each case. The evaluation process begins with an application. Once a company receives an application they will request documentation from your lawyer. The documentation is key in the underwriting process because it allows the representative to fully evaluate the validity and the strength of the case. If during the evaluation process the lender believes you will win your case, they will advance a sum of money that is determined based upon the size and the strength of your case.
Who provides plaintiff funding?
There are a variety of different sources that provide plaintiff funding. The different sources that originate this type of lending include, hedge funds, private investors, investment firms, institutional funds, and in some cases banks. Usually banks are the source of cash for such groups.
How long does it take?
The amount it takes to receive an approval is case by case. Personal injury lawsuits tend to take less time. These cases are easier to underwrite. Personal injury cases are also the most popular type of plaintiff funding available. Commercial litigation claims tend to take longer because the request amounts tend to be larger. There are also very few companies that will underwrite commercial litigation cases. The average amount of time is between 1-3 days from the time the applicant applies for plaintiff funding to the time an applicant receives a check.
Is plaintiff funding right for me?
Plaintiff funding should always be used as a last resort. Because of the risk factor, rates tend to be higher than a normal bank loan. If a plaintiff has no other options and can’t afford to wait the case out, plaintiff funding may be right for you.