A lawsuit loan provides financing to help you pay for legal fees while your lawsuit is active. These loans use the anticipated payout of the lawsuit for collateral. As a result, they are popular on loans where the plaintiff expects a large payment on completion of the lawsuit; this may include divorce settlements, insurance settlements and other damages.

Qualifying for a Lawsuit Loan

To qualify for this loan, you will need good credit and a predictable income. Also, the lender will want to see you have a high likelihood of recovering from your lawsuit. If you are attempting to recover a settlement from a spouse who has declared bankruptcy, for example, you may struggle to obtain a loan.

Risks of a Lawsuit Loan

The main risk of a lawsuit loan is the constant threat you may fail to recover the funds you anticipated when you filed the lawsuit. In this case, even if you win your lawsuit, you may not be able to repay your loan immediately. Lawsuit loan contracts often require immediate repayment upon conclusion of a case. Default risk is high since the ultimate fate of your ability to repay the loan depends on a judge's decision.

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