Settlement loans, also known as lawsuit cash advances, lawsuit loans and lawsuit funding plans, is one type of secured loan that uses an upcoming lawsuit as collateral. The amount of settlement loans are calculated based on the perceived value, or expected value, of your lawsuit and typically award about 10 percent of the calculated value. Getting a structured settlement loan typically involves a third party and you will need to be aware of all of the limitations and requirements that apply to this type of loan before you apply. Still, getting settlement funding in advance can help to pay for certain types of expenses or cover some bills when you are short on cash and preparing for a lawsuit.

How Settlement Loans Work

Settlement loans are awarded based on the likelihood of a lawsuit settlement award in the future. If you are involved in a lawsuit with an insurance company or other party and expect to receive a generous settlement, you may qualify to receive a loan before the settlement is negotiated. Loan providers will use the lawsuit as collateral and you can get up to a 10 percent cash advance on the value of the claim if you are approved.

One of the key things to keep in mind with a settlement loan is that if you don't end up winning the lawsuit and getting the settlement, you will not be required to repay the original settlement loan amount or any fees associated with the lawsuit. This is because getting a structured settlement loan carries an inherent risk, and the loan provider is already aware of the type of risk they are taking. The loan provider will review all information about your case and make a decision based on the expectation that you will win your lawsuit and be awarded the full settlement amount.

Getting a Structured Settlement Loan

Getting a structured settlement loan is a fairly easy process, but you will need to provide as much information as possible about your case. You need to prove to the lender that you are more than likely to win the settlement and fill out some basic paperwork. Unlike other types of loan applications, the structured settlement loan process doesn't involve a credit check or even a background check. You will simply need to provide as much information as possible about a pending case.

The lender will review your case and determine what the actual cash value of your settlement could be. The actual loan amount will only be a percentage of the settlement, and is usually about ten percent of the settlement value. If you do end up winning the settlement, you will be responsible for paying back the full loan amount. If you don't win your case, you will not be required to pay a single dollar back to the lender because the loan is granted based with the risk factored in. If the lender felt that you would not win the settlement, they would have denied the loan when you applied. It is their responsibility to extend loans to candidates who they think will win, which is why structured settlement loans are generally recommended for most plaintiffs.