Getting injured or having your rights violated is hard enough without having to worry about paying the bills while you wait for your case to settle. That wait can drag on for years in some instances. For many folks, a lawsuit settlement advance or pre-settlement loan is a financial lifeline that provides access to fast cash during this difficult period. But most people wonder – exactly how many of these unique loans can you actually get approved for? Let’s take an in depth look.
What is a Settlement Loan?
First, let’s quickly review what exactly a legal settlement loan is so we’re all on the same page. When you have a strong injury lawsuit or other legal claim pending, lending companies will provide you with cash upfront and collect their payment later out of your eventual court winnings or settlement. So unlike regular personal loans, these advances don’t look at things like your credit score or job status, but rather base approval primarily on the strength of your case.
One of the big benefits is that they allow everyday people going through extraordinary hardships to pay for pressing needs when they may have no other source of funds. However, the downsides are that they often charge high interest rates and if you ultimately lose your case, you need to repay the loan yourself.
Typical Loan Limits Imposed By Most Companies
When trying to determine “how many lawsuit loans is too many?”, it helps to understand some of the standard limits imposed by pre-settlement funding companies. While policies can vary, here are a few general guidelines on what you can expect:
- Number of Loans Per Case – Most outfits will provide between 1-5 separate legal cash advances per plaintiff on a single legal claim, regardless of the ultimate settlement value. So expect to max out in that range.
- Percentage of Case Value – To limit risks on what are already risky cash advances, the total loan amounts doled out are typically capped at somewhere between 10% to 20% of your claim’s estimated or confirmed value. Sometimes, for extremely high value lawsuits, the percentage can go a little lower still.
- Absolute Dollar Cap – Many lending companies impose upper limits on the total dollars loaned even if the percentages would theoretically allow more. Those caps usually fall in the $50K – $100K total range.
So putting this all together, on a hypothetical $100,000 settlement case a plaintiff might secure 4-5 separate lawsuit cash advances in the $8,000 to $18,000 range before maxing out the limits, regardless of any dollar cap.
What Factors Impact Your Possible Loan Amounts?
When companies review pre settlement loan applications, what internal factors do they look at to decide in both dollar limits and eligibility for multiple disbursements? Here are a few of the key items under consideration:
- Documentation on Case Value – Naturally, firms need verification from your attorney that your claim demand or settlement talks justify the loan amounts requested. The more solid documentation here, the higher dollars approved.
- Ability To Repay The Loans – Regardless of how big your eventual check may be, the lending outfits still assess if your employment, assets, and current debts reasonably allow room for repayment. Too much debt already and approvals suffer.
- Risk Tolerance Of The Company – Some legal lending operations are simply more risk aggressive than others. So just because one firm caps you out at $15K total, another may still fund further based on their policies.
- Strength Of The Legal Claim – Higher loan amounts and multiple approvals come much easier on strong liability cases versus questionable, hard-to-prove claims. The former spells a surer payback for the lenders.
How To Max Out Your Settlement Loans
If your cash needs sit well above those standard limits we just covered, here are some tips on maximizing your total legal advance borrowings:
- Build An Iron-Clad Case – It may sound obvious, but investing more time improving the legal merits through additional evidence, expert support, witness discovery etc goes a long way here.
- Choose Aggressive Plaintiff Attorneys – Some attorneys naturally push for higher settlements, while others tend to settle cheaply and quickly. Loan results often reflect this.
- Verify Case Value Documentation – Encourage your lawyers to provide as much validation on claim value as possible in responses to the lender inquiries. It makes limits easier to stretch.
- Shop Multiple Funding Firms – With dozens of legal lenders out there, you’ll find some simply more generous than others in their risk appetite, even on the very same case particulars.
- Take Moderate Loan Amounts – Smaller cash disbursements naturally add up quicker across a series of approvals versus fewer larger sums. So don’t get greedy out the gates.
Warning Signs On Taking Too Many Loans
Of course with the convenience and urgency that prompt settlement loan usage in the first place, it is easy to lose perspective taking out one after another after another without much thought. So what red flags should give you pause in stacking up too many lawsuit cash advances? Plenty, including:
- Snowballing Interest Charges – We mentioned above these type of lending products come with notoriously high annual interest rates. Even with attorney imposed rate caps in some states, you still may face 20%, 30% or higher APRs. So with every additional loan, those repay costs add up substantially. It takes bigger chunks out of your eventual payout.
- Possible Over-Lending On Case Value – Remember those key safeguards on restricting total loans to a percentage of potential case proceeds? Well mistakes in estimated value happen, as do miraculous defenses by insurance companies. If real settlements come in well below what’s borrowed against them, trouble ensues.
- Inability To Repay Loans If You Lose – There is always a possibility any lawsuit results in a defense verdict aka losing your case. Yet all those cash disbursements need to get paid back somehow. That spells potential disaster on your credit and future finances if too much is borrowed counting on a win.
Bottom line, settlement loan limits exist for very valid reasons tied to outrageous charges and undesirable outcomes when individual cases don’t prevail. While theoretically possible to take multiples against the same claim, restraint often proves the wisest path forward.
Key Takeaways on Getting Multiple Settlement Loans
So when you break it all down, while you may secure more than one cash disbursement tied to a pending legal claim, there are still practical boundaries in play based on sound risk management. Those absolute limits fall inside typical ranges covered in our discussion, including:
- Number of Loans Per Case – Realistically most reputable legal lenders will provide between 1-4 separate approvals against the same exact claim, regardless of total dollars approved.
- Typical Loan Amounts – Due to required case value substantiation, mandated caps on percentages advanced, and upper dollar thresholds, expect individual cash sums in the $5K – $15K per loan range for most average consumers. Amounts scale up slowly.
- Interest Rates & Fees – The high rates legitimately necessitate thinking twice before piling multiple advances on top of each other given how drastically overall repayment costs inflate.
While ready cash solves the urgent need in the moment, be sure to carefully evaluate repayment repercussions down the road before signing on that dotted line too many times over. Patience has its place, even in painful circumstances.
