What Is a Lawsuit Loan and When Might I Need One?


Lawsuit loans are a relatively recent addition to your lawsuit financing options. These alternatives cover increasingly more ground and include the following categories: violations against the Americans with Disabilities Act, workplace injuries, medical malpractice, harassment, discrimination, and many others.


As people grow more comfortable with demanding compensation for perceived or real-world injuries, they quickly discover that litigation, if not handled on a contingency basis, is tremendously expensive. The recent increase in lawsuit lending options offers extensive financing options for people who couldn’t otherwise afford to file a lawsuit.

Types of Lawsuit Loans

There are two basic types of lawsuit loans: for financing a lawsuit or covering personal expenses while the case is adjudicated. The loan types include recourse and non-recourse loans. Recourse loans are traditional-type loans where you borrow a certain amount and make regular payments to repay the loan’s principal and interest. You’re legally obligated to repay the amount regardless of whether you win your lawsuit or not.


Non-recourse loans offer a better deal for potential plaintiffs because they don’t have to repay their loans if they lose their case. If they win, the fees, principal, and interest charges are deducted from the settlement or court award amount.

Comparing the Terms of Prospective Lawsuit Loans

The cost of these loans can be expensive, so conduct a bit of research before agreeing to a particular offer. Consider that interest rates for these loans can range from 27 percent to 60 percent. However, most people only borrow a fraction of what they expect to receive, so the percentage of interest might make a minimal impact on the received funds. Nevertheless, it makes sound financial sense to look for the best lawsuit loan companies


Take your time to compare different prospects and even reach out to representatives. If they offer a free initial consultation, take the chance and discuss the specifics of your situation. Find out what each candidate has to offer and choose the best deal for you.

Why People Look for Lawsuit Loans

Plaintiffs involved in suing someone may need cash for many different reasons. These include:


  • Paying legal expenses, like investigations and lawyers’ fees.
  • Extending the lawsuit’s timetable to hold out a larger settlement.
  • Paying the critical medical bills for treatments, medicines, and rehabilitation.
  • Covering the loss of income when unable to work.
  • Getting laid off due to Covid-19 restrictions.
  • Arranging a much-needed advance on an expected settlement.
  • Getting some money when you are concerned about not living long enough to receive compensation.


Unfortunately, you usually need a pretty strong case to meet most lenders’ criteria for lawsuit loan approval, especially for non-recourse loans. Some of the reasons that your lawsuit loan application might be denied include:


  • Weak case: if your case is considered weak or you have insufficient documentation, most lawsuit loan companies will deny your application.
  • Local legal prohibitions: pre-settlement funding is illegal in the states of Maryland, Tennessee, and Colorado. Only 20 states allow lawsuit advance loans for workers’ compensation cases. Also, you must reside in the state where you apply for a loan, and auditors will confirm that fact before approving it.
  • No attorney: you stand no chance of approval if you do not have an attorney.
  • Low potential payout: your loan won’t be approved if analysts suspect that your award will not be enough to cover the loan and all related fees and interest charges.
  • History of cash advance abuses: you can apply for cash advances at multiple companies, which could result in borrowing more money than you could repay from your settlement.

Relieving the Stress of Lawsuit Financing

A recourse or non-recourse lawsuit loan can relieve your worries about financial problems during extended litigation. These loan options can also cover medical bills, everyday living expenses, and paycheck shortfalls. The good news is that it is easy to apply. Nobody should have to suffer because you can’t afford to finance a lawsuit.


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