Can You Get Multiple Pre-Settlement Loans?

Pre-Settlement Loans: The Basics

A pre-settlement loan is when a lender advances money to a plaintiff who has a lawsuit pending. The plaintiff can use the cash advance to make ends meet while waiting for an expected settlement.

Legal funding is not like getting a loan from a bank. When you apply to a lawsuit funding company, it does not ask for a credit check, income verification, or the value of assets you own. 

The difference is that banks rely on your ability to repay the debt to decide whether or not to lend the money to you. Legal funding companies instead rely on the strength and value of your pending lawsuit rather than on credit scores and the amount of money you earn.

Legal funding does not rely on your ability to repay a cash advance. Instead, it evaluates your personal injury case and advances a portion of the value of the expected settlement. The legal funding company relies on the strength and value of your personal injury lawsuit.

The cash advance and interest earned on it by the funding company only get repaid from the settlement amount. In other words, it only gets paid if you win the case. If you lose or do not get enough to repay the funding company, you owe nothing to the lender.

Pre-settlement loans are popular because of their simple application process. You complete an online application asking for your name and address and the name of the law firm representing you.

The funding company contacts your attorney for information about the lawsuit. It then reviews the strength and value of the claim and sends you its offer. Once you review the offer with your lawyer and agree to accept it, you could have the cash advance within 24-48 hours.

Some of the types of lawsuits that qualify for lawsuit loans include:

• Personal injury claims, including car accidents, slip-and-fall injuries, and dog bites.
• Medical malpractice.
• Civil rights claims, including hate crimes.
• Wrongful death.
• Work injuries, including construction accidents.
• Employment claims, including discrimination and wrongful termination.

Any lawsuit where a plaintiff seeks a money judgment or monetary settlement may qualify for a loan.

Why Would Someone Want Multiple Pre-Settlement Loans?

Financial needs constantly change. It’s not unusual for a plaintiff to receive a cash advance only to need an additional pre-settlement loan. Some common situations that may cause you to need more money include:

• Settlement of the lawsuit takes longer than expected, and you need more money for medical expenses, rent, mortgage, and food.
• You need additional money for unexpected repairs to your home or car.
• Another lawsuit funding company offers a lower interest rate than your original lender.

Whatever the reason may be for needing a second loan from the same lending company or a different one, it may be possible to get more money.

Can You Get Multiple Pre-settlement Loans?

Talk to your lawyer about seeking additional funds. The law firm handling your claim can update you on the status of the settlement talks with the insurance company for the other party. If they are close to reaching a settlement, you may not need another pre-settlement cash advance.

If you return to the lawsuit loan company, the loan amount you received the first time will determine how much it can give you an additional time. Every lawsuit funding company has its own policies, but you may find the process easier by going back to the first lender.

A lender advances only a portion of the settlement value of your case. Lenders have policies limiting the total amount they will advance. For example, LawsuitLoans.io advances up to 15% of the expected settlement. If it already advanced the 15% to you, it may be unable to offer more unless the expected value of your case increases. Talk to the lender because the value of a case may change as it progresses through the courts.

If you go to a different lender, ask your lawyer to review the funding agreement that you signed. Standard pre-settlement loan agreements may prevent you from getting additional funding while you already have one pre-settlement loan. A buyout is a way to get around the limit on the number of lawsuit loans a plaintiff may have at once.

A buyout means applying to a new pre-settlement funding company for a lawsuit loan. If your application is approved, the new lender buys the first lawsuit loan. This lets you get the advantage of a lower interest rate from the new lender. 

You also could be eligible for an additional cash advance if the new funding company advances a greater percentage of the expected settlement than the first lender.

What Is The Biggest Hindrance To Getting Another Advance?

The value of your expected settlement may stand in the way of another cash advance. Lenders set limits on how much they lend. A funding company with a 10% lending maximum only gives up to $10,000 as a cash advance on a settlement valued at $100,000.

If you did not take the maximum cash advance, a company should approve you for another advance up to its lending limit. Your other option is to apply for a second lawsuit loan at a company with a higher lending limit than the first one. The second lender may do a buyout of the first loan to get you a second advance.

Keep in mind that each cash advance reduces how much you get from the settlement money. Reputable lenders, such as LawsuitLoans.io, disclose their interest rates upfront. They do not charge hidden fees, so you know what your lawsuit loans cost.

The lender and your lawyer can show you what effect a second cash advance has on the money you get from the settlement or judgment. Use this information to make an informed decision about additional borrowing.