Lawsuit Loan | Lawsuit Loans

When it comes to getting an approval on your lawsuit loan, the chances are pretty slim.  It is estimated that out of all the lawsuit loan applications accepted throughout the whole year, only a small percentage of these will be approved.  The other applications are rejected for various reasons ranging from not having an attorney to handle the case, to not having the right documents to go forward with the case.  

If you belong to the percentage of lawsuit loan applications which are declined, the best thing to do is make sure your next application falls in the category of an approved lawsuit loan, which will be discussed later as we go on.  Bear in mind that by having a clear view of how the lawsuit loan funding companies view different applications which are recieved by them, you can greatly increase the chances of getting a quick approval.

What to have in mind when applying for a lawsuit loan.

Lawsuit funding companies like to imagine themselves as “investors”, or venture capitalists; meaning they expect a return on investment upon the approval of your lawsuit loan.  The more reasons they see your lawsuit as credible, the better your chances of getting the loan.  So if your lawsuit loan was declined, one very possible reason for that could be your case was not “fundable.”

What is a fundable case?

A fundable case is a case which guarantees the lenders that they will get paid back, more than the amount of the loan given to you.  This is the number one factor that most lawsuit loan funding companies look for at first.  The best way to guarantee you have a fundable case is to make sure your case does not fall under these examples:

-  The client is a minor, and this includes clients in many birth defects cases

-  Cases which do not need the service of an attorney, and are of small claims

-  Cases which include custody disputes.  Lawsuit loan lending companies are not interested in these at all.  The same applies to divorce cases.

-  Disputes between landlords and tenants

-  Cases involving immigration

-  Cases about Social Security

Another basis which lawsuit loan funding companies rely on to determine whether or not a case is fundable, is if the case still has “equity.”  Equity is defined in lawsuits as the value of a lawsuit minus all the liens, fees, and other expenses.  The lower the equity of a lawsuit, the lower the chances are of a loan approval.

Be cautious with liens.  They greatly reduce the equity of your case.  Examples of liens are: medical, welfare, child support, taxes, lawsuit advances, and others.  Another thing that will eat into your equity are attorney fees.  Based on what a case settles for, 20% to 50% of that will go to your attorney’s fee.

If you had a previous advance on your case, chances are your case has no more equity.  This will discourage financing companies on approving your lawsuit loan.

Getting started with your lawsuit loan application

If your case does not fall under the non-fundable category and still has equity, then you are a step closer to getting your lawsuit loan approved.  Here are some pointers to look at while analyzing your case for a lawsuit loan.

Hire a reliable attorney.

First and foremost, lawsuit loan companies want to make sure that you are being represented properly in court.  This not only assures them that your case is being handled professionally and legally, but it also guarantees that a client will pay them back.  The attorney, as an independent third party, can make sure that the company gets paid back once a settlement is reached.

Have a contingency agreement with your attorney.

A contingency agreement is an agreement that your attorney will only get paid if your case is won.  As opposed to a fee agreement, where a client and an attorney agrees upon a certain amount of money to be paid to the attorney, working on a contingency basis will also guarantee your attorney will do his or her best to win.

Be sure your attorney cooperates with the lawsuit loan company.

Oftentimes in good lawsuits, especially where a client is in desperate need of money, an attorney will not agree to a lawsuit loan company in defense of looking out for their clients best interests.  The attorney will complain that the fees are to expensive, and will discourage a client to work with a lawsuit loan.

This is true in some cases, but in most cases an attorney does not understand the severity of a client who has a financial problem and is in dire need of money.  A good example of this would be a client who is facing an eviction or foreclosure, and has been unable to earn an income due to a certain injury.  Most attorneys are used to getting paid, and will discourage a client to work with a lawsuit loan, although this may be the only best option for a client.  There are certain legal issues your attorney has to face when dealing with lawsuit loans but he or she should be able to help you without breaking any law.

Prepare all the necessary paperwork.

Lawsuit loan companies also base their decisions on documents.  A company cannot fund a case if the necessary paperwork is not available.  One good example of this is an expert report when it comes to medical malpractice cases.  The company needs this to base their evaluation on.  A lawsuit loan cannot be given if the necessary documents are not available.

Double-check your contact information.

Another reason why lawsuit loans are declined is because a client’s contact info is wrong, such as a wrong address, phone number, or social security number.  This also goes for the attorney’s information.  Make sure that all your info is correct so that the company can easily get in touch with you.

Your case needs to be at least a month old

The problem with a new case is most companies worry that the necessary documents and papers are not yet prepared due to the case being too new.  When a case is new, the documentation to determine whether your case is good or not may not be available.  Also, necessary paperworks like a police or accident report, medical records, insurance coverage info, and others are needed to make a case credible.

So the next time you apply for a lawsuit loan, follow these simple instructions and you’ll be having your approval in no time.