Pre-settlement legal funding from High Rise Financial functions as a non-recourse loan (NOT a lawsuit loan). Non-recourse is a form of debt that makes sure you are not held personally liable for repayment. In other words, it’s a way of protecting you from the lender’s overreach.
All debt can be divided into two categories: recourse and non-recourse. In fact, the Internal Revenue Service classifies debt into either of those categories. Pre-settlement legal funding is just one specific type of non-recourse debt, and it ultimately means that you don’t have to repay the loan if you lose your lawsuit.
Learn everything you need to know about non-recourse loans, how they work, and how to get assistance from High Rise Financial here.
What Is a Non-Recourse Loan?
“Non-recourse” is just a term that denotes certain qualities of a loan or debt. Essentially, this kind of debt protects the borrower from being held personally liable for the full value of the debt. In other words, if you default on a non-recourse loan, the borrower is allowed to take at maximum the collateral with which you backed the loan. The borrower is not able to do things like garnish your wages for repayment, since your personal finances do not come into play.
High Rise Financial provides injury victims with pre-settlement legal funding that is non-recourse in nature. This means we get repaid directly out of your eventual settlement or jury award, avoiding the need for you to agree to monthly payments with compound interest. Since the funding we provide is non-recourse, you owe us nothing if you lose your case!
How Do Non-Recourse Loans Work?
The process for getting a non-recourse loan is the same as for a recourse loan. You sign a payment arrangement from a lender, get the money on offer, and pay back your loan according to the repayment terms to which you agreed. However, there is one key difference. Non-recourse loans do not hold you personally liable for the debt. Instead, the most the borrower can take as repayment is the collateral against which the loan was taken out. Here is an example.
- You get a non-recourse loan from the bank to buy a house.
- You end up defaulting on the loan.
- The bank seizes your house, since that was the collateral associated with the loan.
- The bank is not able to take money out of your paycheck, or pursue further payment, even if the value of your home does not cover what you owe.
At High Rise Financial, we provide non-recourse funding to people with pending personal injury settlements. At the end of the process, we are repaid out of the injured person’s compensation package — whether that is a jury award or a settlement agreement. Since our funding is non-recourse, you don’t have to pay us back if you lose your case!
What Are Non-Recourse Loans For?
Non-recourse loans can be for anything, from home purchases to new vehicles to pre-settlement legal funding. The thing that makes non-recourse loans special is that they are designed to protect the borrower. They do this by limiting the ways in which the lender can pursue repayment. For example, the lender is unable to take anything more than the collateral associated with the loan even if that collateral does not cover the full value of what is owed.
Pre-settlement personal injury legal funding from High Rise Financial is non-recourse in nature. The “collateral,” or the method by which we are paid, is the eventual negotiation package or jury award won by the injured person. Here’s how it works:
- You file a lawsuit and get pre-settlement legal funding to help with money issues while the case pends.
- Your attorney wins you a compensation package.
- The at-fault party sends your attorney a check for the settlement or jury award amount.
- Your attorney sends High Rise Financial a check for the agreed upon repayment amount.
- You keep the rest of the compensation!
Importantly, we cannot pursue repayment if you lose your claim. This means our non-recourse funding is no-risk.
Who Offers Non-Recourse Loans?
Non-recourse loans are offered by a variety of lenders across the country. The term simply means that the borrower is not held personally liable for the full value of the loan, so lenders are restricted in the ways they can pursue repayment.
High Rise Financial is a credible, respected, authorized lender of pre-settlement legal funding that is non-recourse in nature. We provide clients with pending personal injury lawsuits the funds they need to get them through the uncertain time during which their attorney negotiates with the at-fault party who caused their injuries. Then, once they receive compensation, the injured person simply pays us back out of that compensation package.
Since our funding is non-recourse, the injured person is not held personally liable. So, they do not have to repay the funding if they do not win their case!
Who Is Eligible for a Non-Recourse Loan?
Eligibility for a non-recourse loan depends on the lender and the type of loan on offer. Some lenders accept only borrowers within a certain credit range. Others put more emphasis on debt-to-income ratios. At High Rise Financial, our eligibility requirements do not have anything to do with your:
- Credit history
- Income level
Instead, you are eligible for non-recourse pre-settlement legal funding if you meet the following criteria.
- You have a personal injury claim on file.
- You are represented by an attorney or law firm.
If you qualify, our underwriters will evaluate your situation and decide whether we can offer you pre-settlement legal funding. This money becomes yours in as little as 24 hours, and then you repay us the agreed upon amount out of your eventual compensation package. If you do not win your lawsuit, you don’t have to repay the funding. That’s what it means for the funds to be non-recourse: we do not hold you personally liable for the debt, and won’t do things like enforce monthly payments or take part of your wages as repayment.
What’s the Difference Between Non-Recourse Loans and Recourse Loans?
The difference between non-recourse and recourse loans comes down to two words: personal liability. With a recourse loan, the lender holds the borrower personally responsible for the entirety of the debt. If the borrower defaults on their loan payments, the lender can do things like:
- Take collateral (such as a car or house)
- Hound the borrower for payment
- Take part of the borrower’s paycheck each month until the debt is repaid in full
With a non-recourse loan, this is not the case. Non-recourse loans set a restriction on how the borrower can pursue repayment. The most a borrower can do is take the collateral associated with the loan.
For example, an auto loan company that has provided a non-recourse loan could take your car if you default on repayment, but they cannot then continue to take money out of your paycheck if the value of the car did not cover what you owe.
High Rise Financial exclusively provides non-recourse funding to clients with pending personal injury lawsuits. We are repaid out of the eventual compensation package received by the injured person. Since these are non-recourse funds, the injured person does not have to pay us back if they lose their lawsuit!
Are Non-Recourse Loans Worth It?
Non-recourse loans, and non-recourse debt in general, are the better kinds of loans or debt to take on. All loans are split into either recourse or non-recourse by the Internal Revenue Service. Unlike recourse debt, non-recourse loans do not hold the borrower personally liable for the debt, so borrowers do not face as much risk when taking out the loan.
While High Rise Financial provides pre-settlement legal funding, our funding is considered non-recourse and comes at no risk to you. Since it’s non-recourse debt, you do not have to repay us if you lose your lawsuit. If you win your lawsuit, we get a portion of your compensation as repayment, and you keep the rest.
Ultimately, it is up to you and your attorney to decide whether pre-settlement legal funding is right for your case. However, if you need money and must take out a loan, non-recourse is vastly superior to recourse debt.
Does it Cost Anything to Apply for a Non-Recourse Loan?
Some lenders may charge you an application fee to get a loan. Just because a loan is non-recourse does not mean the lender allows free-of-charge applications. However, High Rise Financial does.
We help injured people get non-recourse pre-settlement legal funding, and applying is FREE. Even better, we get paid directly out of your eventual compensation package rather than your personal finances, so our application process is simple. That means:
- NO credit check.
- NO prying into your income levels.
- NO proof of employment required.
Instead, our application process revolves around the details of your personal injury claim. Our underwriters base their decision regarding how much funding to provide on elements like the extent of your injuries, previous settlements or jury awards in similar cases, and the expected compensation package predicted by your attorney.
We don’t believe in charging the people who are most vulnerable. If you have a personal injury lawsuit and need some extra cash to hold you over while your case resolves, fill out the form on our Apply Now page for FREE.
How Long Does it Take to Process an Application for a Non-Recourse Loan?
“Non-recourse” is a term that simply means you are not held personally liable for the debt associated with your loan. In this way, non-recourse loans protect the borrower, whereas recourse loans leave the borrower at higher risk. Since this type of lending can apply to any loan (i.e. auto loans, home loans, etc.), it’s impossible to say how long an application will take. That depends on the specific lender.
At High Rise Financial, we provide non-recourse pre-settlement legal funding. It’s not a loan per se, but it is non-recourse and is offered at no risk to you. How long does it take our team of underwriters to process your application? That depends on the complexity of your personal injury lawsuit, but many of our clients get money in their bank account in as little as 24 hours.
Timelines may vary because our repayment comes directly out of your compensation package once your personal injury claim resolves. We look at factors such as the extent and ramifications of your injuries, prior case history for similar claims, and the amount of compensation you are likely to receive.
Is There Interest on Non-Recourse Loans?
Lawsuit funding is a varied industry, and some lenders are predatory. When getting a recourse loan, you might end up on the hook for two to three times more than what you borrowed. A lot of that is due to the use of compound interest, which increases the amount you owe exponentially over time. Non-recourse pre-settlement legal funding from High Rise Financial, on the other hand, uses a flat fee system rather than compound interest. That’s right: there is no compound interest on the funding we provide.
Before we send you your financial assistance, you sign a repayment agreement that includes the exact flat fee we charge. Then, when your case resolves, your attorney simply writes High Rise Financial a check for the agreed upon amount and you keep the rest of your compensation package.
Perhaps an even better perk is that non-recourse funding prevents you from being held personally liable for the debt. That means we will never hound you for monthly payments, and you owe us nothing if you lose your lawsuit. Given these factors, we can safely say that High Rise Financial’s pre-settlement legal funding is provided at no risk to you!
Can You Apply for More Than One Non-Recourse Loan?
High Rise Financial doesn’t provide loans. Instead, we offer non-recourse pre-settlement legal funding to clients with pending personal injury claims. The idea is to get injured people the money they need to wait out the time it takes to negotiate a proper compensation package for their injuries. But what happens if your lawsuit ends up taking longer to resolve than you thought? Or what if some unexpected expenses crop up and you become financially stuck again?
Don’t worry. You can apply for more funding. All you have to do is fill out a new application and explain your situation to our underwriters. They are always willing to work through possible funding restructuring to meet your needs.
Remember, pre-settlement legal funding is not really a loan. You don’t owe us anything if you lose your claim, and you aren’t locked into monthly payments at high interest rates. Instead, you simply pay us back out of your settlement or jury award and keep the rest of the money you deserve.
Do Non-Recourse Loans Show Up on Your Credit Report?
There is no need to do a credit check when you apply for non-recourse pre-settlement legal funding, since the decision to provide funding rests not on your personal financial situation but on the merits of your personal injury claim. However, non-recourse debt might show up on your credit report. Still, this should not exert much of an impact on your credit score, as your repayment comes directly out of the compensation package you receive at the end of your case. Thus, there is no way to “default” on pre-settlement legal funding from High Rise Financial.
You don’t need to be worried about your credit report just because you’ve taken out non-recourse legal funding. The process is designed to be risk-free for you. For example, the funds being non-recourse means that you do not owe us anything if you lose your case. You won’t have to struggle to meet monthly repayment deadlines, and you won’t be subject to compound interest.
How Do I Know if My Loan Is Recourse or Non-Recourse?
When you take a loan, your lender should provide you with information that states the terms to which you agree. Ask your lender whether the loans they offer are recourse or non-recourse, and make sure you are comfortable with the repayment process. At High Rise Financial, our pre-settlement legal funding is always non-recourse, so you don’t have to worry about being held personally liable for your debt.
This is an important distinction, as the difference between recourse and non-recourse loans can greatly affect your finances. If your loan is recourse in nature, you are held liable for the full debt you incur. This means the lender can take the collateral and continue to pursue payment from you, even taking money out of your paycheck until they are repaid in full. Non-recourse funding from High Rise Financial, however, is safe and protects your personal finances. We get repaid out of your settlement or jury award, not out of your bank account!
Is a Non-Recourse Loan Taxable?
Some loans are taxable, depending on the reason for the loan. For example, you might be taxed on a car loan because a vehicle is a taxable asset. However, non-recourse pre-settlement legal funding from High Rise Financial is a form of lawsuit lending (though we don’t offer lawsuit loans). Typically, the IRS does NOT tax this form of loan, since the repayment comes from your eventual compensation package and both jury awards and settlements are not taxed.
There might be some exceptions to this, though, depending on your location and how you spend your pre-settlement legal funding. Using the funds for everyday expenses, medical bills, groceries, utility payments, rent, and other necessary items will not result in your legal funding being taxed. On the other hand, an investment made with money that was part of your pre-settlement legal funding will be taxed like any other investment.
Get in touch with a member of the High Rise Financial team today to learn more about how pre-settlement legal funding can help you, and how you can avoid taxes on this financial assistance.
When Do You Have to Start Repaying Non-Recourse Loans?
Non-recourse pre-settlement legal funding from High Rise Financial is repaid directly out of the settlement check or jury award you receive at the conclusion of your personal injury lawsuit. This means there is no time in which you have to “start” repaying the loan, and you aren’t locked into monthly payments. In fact, you don’t have to lift a finger when it comes time to repay. Here’s how the process works.
- Your lawsuit results in a victory (either a settlement agreement or award in court).
- The at-fault party and their attorney send your lawyer a check for the compensation amount.
- Your lawyer writes High Rise Financial a check for the agreed upon repayment amount, takes out their attorney’s fees, and sends the remainder to you.
- That’s it! It’s done! There are no more steps to take, and you don’t have to remember any monthly payment deadlines.
It’s important to know that “non-recourse” refers to the fact that you are NOT held personally liable for the debt associated with your pre-settlement legal funding. If you lose your lawsuit and get no compensation, you keep the funds and do not have to pay us back!
How Long Do I Have to Repay a Non-Recourse Loan?
Different lenders will place different restrictions on the repayment process, so non-recourse loans in general can have various deadlines for repayment. High Rise Financial offers personal injury claimants pre-settlement legal funding, which is non-recourse but is significantly different from a lawsuit loan.
For starters, there is no deadline for repayment, as we get repaid directly from your settlement or jury award. If you win your lawsuit, your attorney will receive a check from the at-fault party. Then, they will write High Rise Financial a check for the agreed upon repayment amount, take out their attorney’s fees, and send you the rest of your deserved compensation. By the time you get your money, your non-recourse pre-settlement legal funding is already repaid!
Additionally, High Rise Financial offers exclusively non-recourse funding because this type of debt protects the borrower (YOU!). You do not have to pay us back if you lose your case, and you aren’t held personally liable for the debt. We cannot legally hound you for repayment, or garnish your wages each month like other lawsuit lenders. That’s how we protect you.
How Does the Non-Recourse Loan Repayment Process Work?
Depending on the lender from whom you borrow your non-recourse loan, your repayment process can work in different ways. The non-recourse pre-settlement legal funding offered by High Rise Financial is designed to have the simplest, most transparent repayment process on the market. Here’s a brief breakdown of the repayment process.
- You get your pre-settlement legal funding to ease your financial burden as your personal injury lawsuit proceeds.
- Your lawsuit ends with a victory, either as a settlement agreement with the other party or a jury award ruling in your favor.
- Your attorney gets a check from the at-fault party for the compensation amount, and then writes a check for the repayment amount to High Rise Financial.
- You keep the remainder of your compensation package and don’t have to worry about any monthly payments!
We work directly with your attorney when your lawsuit ends, so you don’t have to worry or stress over repayment at any point. Even if you wind up with a compensation package that doesn’t fully cover your debt, there is no risk to you. We can’t go after your personal finances for repayment. Plus, if you lose your case, you don’t have to pay us back!
What Happens to My Non-Recourse Loan if I Lose My Case?
Many clients considering pre-settlement legal funding may worry over the repayment process. If you lose your case, you might be stressed about having to repay the money you borrowed. However, you don’t have to worry about this! High Rise Financial offers all our pre-settlement funding as non-recourse debt. That means you aren’t held personally liable for the debt, and the compensation package you receive is considered the collateral. If you lose your case, you don’t have to repay us at all.
High Rise Financial offers non-recourse funding because we are dedicated to helping injured people. Recourse lenders often institute predatory practices like locking you into monthly payments even if you lose your case. They also have little restrictions on how they can get repayment, even going so far as to garnish your wages until the debt is paid off.
When you get funding from us, it comes at no risk to you. That’s our promise, and it’s why so many clients have trusted us to provide the money they need while waiting for the justice that they deserve.