How Can I Borrow Money Against a Lawsuit Settlement?

Are you involved in a lawsuit and eagerly awaiting a settlement but need cash now to cover urgent expenses? Borrowing against your lawsuit settlement might be the solution you’re looking for. This option can provide immediate financial relief, but it’s essential to understand the process and the potential risks involved.

One way to access funds before your settlement is finalized is through a lawsuit loan or pre-settlement funding. This option allows you to borrow money against the anticipated settlement amount, offering financial support when you need it most. Keep in mind, though, that this is not a traditional loan, and the repayment terms can vary significantly.

While borrowing against your lawsuit settlement can be beneficial, it’s important to be aware of the potential drawbacks. The interest rates and fees associated with pre-settlement funding can be high, which might reduce the amount you ultimately receive. By thoroughly researching and understanding these factors, you can decide whether this option is right for you.

What is a Lawsuit Settlement Loan?

A lawsuit settlement loan, also known as pre-settlement funding or a lawsuit cash advance, allows you to borrow money against your expected settlement proceeds. It’s not a traditional loan but rather a cash advance based on the anticipated outcome of your legal case.

How Lawsuit Settlement Loans Work

Lawsuit settlement loans can provide much-needed financial relief while you await the resolution of your case. Understanding the steps involved can help you make an informed decision about whether this option is right for you. Here’s how it typically works:

Case Assessment: A funding company evaluates the details and merits of your case to determine its potential value and the likelihood of a successful settlement.

Loan Offer: Based on the assessment, the company offers you a portion of your expected settlement amount upfront. This offer is typically a percentage of the anticipated final settlement.

Acceptance and Funds Disbursement: If you accept the offer, you receive the agreed-upon funds. This money can be used to cover immediate expenses while you await the final settlement.

Repayment Agreement: In return, the funding company secures the right to a portion of your future settlement or award. This means when your case is resolved, the company is paid back from the settlement funds, including any fees and interest agreed upon.

Regulatory Insights and Recent Settlements

Borrowing money against a lawsuit settlement has garnered attention from regulatory bodies and led to significant settlements and policy changes. The Federal Trade Commission (FTC) and the U.S. Department of Education have been involved in cases that illustrate the importance of understanding the terms and risks associated with these financial products.

For example, the case against DeVry University underscores the importance of understanding financial product risks and terms. The FTC found that DeVry misled students about employment rates and income levels, emphasizing the need for consumer awareness. The FTC’s involvement prompted policy changes and enforcement against deceptive practices.

Similarly, the settlement with Navient, one of the nation’s largest student loan servicers, demonstrates regulatory bodies’ involvement and the magnitude of settlements. The decision states that Navient will provide relief totaling $1.85 billion to resolve allegations of unfair and deceptive practices, including $1.7 billion in debt cancellation and $95 million in restitution. This highlights the attention of regulatory bodies and the substantial settlements reached in response to deceptive financial practices.

Differences Between Lawsuit Loans and Traditional Loans

The key difference is that settlement loans are non-recourse, meaning that you generally don’t have to repay the advanced funds if you lose your case. In contrast, traditional loans require repayment regardless of the outcome of your lawsuit.

Qualifying for a Lawsuit Settlement Loan

Qualifying for a lawsuit settlement loan can offer financial support during legal proceedings. Understanding the process helps plaintiffs decide if this option is right for them.

Types of Cases Eligible for Settlement Loans

Lawsuit funding is commonly available for personal injury cases, such as:

  • Car accidents
  • Medical malpractice
  • Slip and fall incidents
  • Defective product injuries Other eligible case types may include employment disputes, civil rights cases, and class action lawsuits.

Factors Lenders Consider When Approving a Loan

Funding companies assess your case’s merit and likely settlement amount when deciding whether to offer a loan. Key factors include:

  • Strength of liability arguments
  • Extent of damages
  • Quality of legal representation
  • Anticipated duration of the case Your personal credit generally doesn’t come into play, as repayment hinges on the lawsuit outcome.

The Application Process

In order to apply, you generally need to provide the following:

  • Details about your lawsuit
  • Attorney information
  • Supporting documentation such as the complaint, medical records, and police reports. Your lawyer must be willing to cooperate in the application process.

The underwriting team will assess the risk and potential value of your case. If your documentation is in order, the process can be as quick as 24 hours! Most reputable lenders will provide funding within a week of receiving a completed application.

Costs and Repayment of Lawsuit Settlement Loans

The costs and repayment terms of lawsuit settlement loans are crucial for plaintiffs considering this financial option. Knowing the details of repayment can help plaintiffs make informed decisions about their financial future.

Interest Rates and Fees

Settlement loans often have high interest rates, which can compound monthly. Rates of 3-5% are common.

Repayment Terms

If your case is successful, the loan and accumulated interest are deducted from the settlement proceeds before you’re paid. There are usually no required monthly payments. Repayment is made in one lump sum after the case is resolved.

Non-Recourse Nature of Settlement Loans

Settlement loans are usually non-recourse, meaning that if you lose or your case is dismissed, you won’t have to repay the loan. The funding company takes on this risk but charges high rates in return. Laws on recourse can differ, so it’s important to carefully review your loan agreement.

Pros and Cons of Borrowing Against a Lawsuit Settlement

Let’s take a closer look at the benefits and downsides of using a lawsuit settlement to ensure that you can make a well-informed decision.


  • Access funds for living expenses and medical bills while your case is pending
  • No monthly payments required
  • No credit check or income verification needed
  • Keep your case going rather than accept a lowball settlement offer


  • High interest rates can consume a substantial portion of your settlement
  • May create conflicts with your attorney, who has a duty to put your interests first
  • Risk of owing more than your settlement is ultimately worth
  • Fewer funds available to cover liens, legal fees, and case costs

Alternatives to Lawsuit Settlement Loans

There isn’t just one way to secure funding. If lawsuit loans don’t align with your needs, consider these alternatives:

Personal Savings and Investments

Your own savings, if available, are the lowest-cost option for funding your living expenses during a protracted legal battle. Consider liquidating stocks or other investments if you have them.

Traditional Loans and Credit Options

While traditional bank loans require credit checks and income, the interest rate is often much lower than that of lawsuit loans. Explore personal loan options. Low-interest credit cards can also provide a temporary buffer.

Assistance from Family and Friends

Borrowing from family or friends who can afford to float you a loan may be preferable to high-interest lawsuit funding. Treat it as a business transaction with a written agreement on repayment to avoid damaging relationships.

Takeaways and Next Steps

Borrowing against a lawsuit settlement offers quick financial relief for urgent expenses. Although lawsuit settlement loans can come with high costs, they are typically non-recourse, meaning no repayment is required if you lose your case. If you’re considering this option, remember to weigh the risks and costs. If you’re ready to explore lawsuit loans, here are the next steps to consider:

Consult with Your Attorney

Your lawyer is ethically obligated to protect your interests. Have a frank discussion about the necessity and implications of taking out a loan against your settlement. Attorneys are often able to negotiate with lenders on your behalf!

Carefully Weigh Your Options

Lawsuit settlement funding is expensive. We’ve seen clients wind up with little to show for their settlement after paying back these loans. Explore all alternatives before committing to one.

Research and Compare Lenders

Not all lawsuit loan companies are created equal. If you decide to seek funding, thoroughly vet your options. Look closely at interest rates, fees, and repayment terms. Read the fine print on what happens if you lose your case.

Get the Cash You Need with a Mayfair Legal Funding Lawsuit Loan

Navigating a lawsuit is stressful enough without worrying about making ends meet in the meantime. Our team at Mayfair prides itself on transparency, reasonable rates, and compassionate service. In our experience, clients who truly have no other options often benefit from a thoughtfully structured lawsuit loan.

The loan representatives at Mayfair can help you understand your options and secure funding quickly if a settlement loan is your best path forward. Don’t let financial pressure force you into an unfair settlement. Call us at (888) 357-1338 for a free consultation on settlement funding today!

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Frequently Asked Questions (FAQs)

How long does it take to get approved for a lawsuit loan?

The approval process is often very quick, typically ranging from 24 hours to a few days. The key is having all required documentation ready to go.

Will my lawyer need to be involved in getting a settlement loan?

Yes, your attorney’s cooperation is essential, as the funding company will need access to case documents and details to evaluate your expected settlement. Your lawyer will also need to sign off on the loan agreement.

Are lawsuit settlement loans regulated?

Over the past decade, lawsuit lending has become a multibillion-dollar global industry funded by hedge funds and foreign interests. However, increased litigation, driven by unchecked lending, has led to rising insurance costs. Regulatory approaches to address this issue include usury laws, champerty and maintenance laws, and disclosure agreements.

What happens if my settlement is less than expected?

If your case resolves for less than anticipated, you’re responsible for repaying the full loan balance, which can consume most or all of your award. In a worst-case scenario, you could even owe the lender money. This risk underscores the importance of only borrowing what you truly need.