Loans Pending a Settlement Lawsuit

If a person is injured either physically or emotionally by the actions or negligence by another person, the former may file a settlement lawsuit against the latter which will eventually lead to the payment of cash for settlement to the injured party once the court decided in favor of the plaintiff. This cash settlement may be in the form of either lump sum money or structured settlement. The structured cash settlement is more preferred by many as this is mutually beneficial to both the plaintiff and defendant. Moreover, because the structured cash settlement is usually in smaller amounts in several scheduled payments agreed upon by both the plaintiff and the defendant, the taxes are generally lower as well. In fact, there are times when the structured settlements are totally tax-free.

However, because the litigation process usually takes longer, the plaintiff may face financial difficulties that will cause him to avail of a cash advance settlement. Cash advance settlements are settlement loans that are being offered to the injured party of a pending lawsuit. This type of loan is a very good way for the plaintiff, who cannot get a permanent job due to medical reasons caused by his injury, to have a certain amount of cash necessary to support his finances, while waiting for the court decision and the settlement cash to be awarded to him.

The wonderful thing about a settlement loan is that the plaintiff, or borrow, does not need to pay this in the event that he loses his case. That is why most settlement loan providers carefully evaluate the case status of the applicant and make sure that they only grant the loan to those borrowers who have bigger chance of winning the case. The drawback about settlement loans, however, is that their interest rates are generally higher. Thus, it is important that the borrower only borrows the amount that he needs before the case is finally decided upon, in order to avoid paying unnecessary taxes. It is also important for the borrower to inform his lawyer ahead of time that he is planning to avail of the loan as the lawyer needs to be prepared to give the necessary documents to the lender for the application of the loan.


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