If you’re exploring the possibility of applying for non-recourse legal funding, money may be tight as you wait for your personal injury claim to settle. But before deciding on a loan to make ends meet, it’s good to know the details of how to pay non-recourse funds back.
Let us set your mind at ease. If you’re wondering whether you are responsible for non-recourse payments if you lose your case, the answer is simple: no, you are not. Let us explain.
Non-Recourse Funding vs. a Typical Loan
There are several differences between non-recourse legal funding and a typical loan. Some of the differences have to do with how you qualify for legal funding, while others have more to do with how you repay the “loan.”
Non-Recourse vs. Recourse Loans
First, it helps to go over what non-recourse and recourse loans are. A recourse loan is a typical car loan where, if you fail to make payments, the lender can repossess your car and then sell it. Since a car’s value depreciates pretty quickly, you may owe more on the car loan than the bank was able to sell it for.
In this scenario, the lender has legal recourse to go after you to get you to pay what you owe. They may put a lien on other assets or get the court to garnish your wages.
With a non-recourse loan, if you default on the loan the lender can only take back the collateral for the loan and cannot pursue you for further payment. An example of a non-recourse loan is a home mortgage loan. If you default on the loan, the lender can put your home into foreclosure. The bank will then sell the house. If they sell the house for more than you owe on the loan, the bank makes a profit. If the sale price is short of what you owe, the bank takes the loss. They cannot go after your other assets or garnish your wages.
Qualifying for Non-Recourse Legal Funding
The only thing you need to do to qualify for a loan in the form of non-recourse legal funding is to be involved in a personal injury claim and have a lawyer representing you. We base the money we advance you on your eventual settlement, rather than on your credit score.
What this means for you:
- NO credit check
- NO providing proof of employment
- NO providing tax documents
Fill out the form on our Apply Now page if this sounds like a good solution to your financial woes.
Paying Back Your Non-Recourse Funding
In addition, paying back your non-recourse legal funding is different from a typical loan as well. This is because rather than make monthly payments that include principal and interest, all you need to do is pay us back the legal funding amount, plus our one-time, flat-rate fee.
The entirety of the money we provide is yours to spend as you see fit. Most of our clients use their non-recourse funding for living expenses, including:
- Mortgage payments
- Rent payments
- Credit card bills
- Car payments
- Medical bills
- Utility bills
If you have a good lawyer, you may have been able to negotiate some of those payments, but if you are out of work due to your injuries, you need some source of income. Non-recourse funding can be a good solution.
For a free legal consultation, call (877) 735-0016
When You Win Your Case
We already established that if you lose your case, you are not responsible for non-recourse repayments. But if you win your case (and most of our clients do), you are responsible for paying the full amount we agreed to.
When you win, the other side will write a check or transfer funds to your law firm’s bank account. Your lawyer will then pay us back from those funds. After they deduct their legal fees and any other required payments (such as back taxes or a medical lien), the remainder of the settlement or jury award is yours.
We advise clients to check with a tax professional, because while the IRS Publication 4345 says compensatory damages for personal injuries are generally not taxable, there may be portions of your award, such as punitive damages or payment of lost wages, that would be subject to income tax.
Apply Today for Non-Recourse Legal Funding
At High Rise Financial, we have helped thousands of personal injury plaintiffs over the years. Our goal is to help you financially so that you can stop stressing about bills and focus on your case. Your lawyer needs time to build the strongest case possible in order to negotiate the best settlement.
Sometimes insurance companies and other parties try to drag out a personal injury case in the hopes you will settle for a lowball offer. Pre-settlement legal funding helps you resist the urge to settle by helping you pay the bills.
Just fill out the form on the Apply Now page to get started. In many cases, we approve clients and get them their funds the same day they apply. If you have questions, please call us at (866) 407-6404 and we’ll be happy to help.