Are Non-Recourse Loans Worth It?

Deciding whether to take out a loan is always a tough decision. You need to make sure you weigh repayment obligations, your overall debt-to-income ratio, and the benefit you stand to receive by getting financial assistance.

Ultimately, only you can decide whether a loan, cash advance, or pre-settlement legal funding is “worth it.” However, if you need financial aid, non-recourse loans are infinitely better than recourse loans. That’s because non-recourse debt, as classified by the Internal Revenue Service, protects the borrower from overreach when it comes time for repayment.

Why Recourse Loans Are Dangerous

High Rise Financial provides pre-settlement legal funding to clients with personal injury claims in the works. This differs from predatory lawsuit loans, which have been decried by organizations like the New York Times and the Center for Public Integrity. 

Those other lenders usually offer recourse loans, which means you might get locked into monthly payments even if you lose your lawsuit, or you could end up paying back two to three times the amount you borrowed due to compound interest rates.

With us, you don’t worry about those issues. Read on to learn more about how our funding protects you. If you are ready to get the money you need today, just fill out the form on our Apply Now page. We are also available to take your questions via phone or email.

To apply for free, call (877) 735-0016

How Non-Recourse Funding Protects You

When you take on non-recourse debt, you are NOT held personally liable for the full value you owe. Instead, the maximum amount that the lender can take in the event of default is whatever collateral has been put up for the loan. Here’s an example using an auto loan:

• You take out a recourse auto loan from your bank, using the car you purchase with the funds as collateral.
• Eventually, you default on loan repayment, and the bank repossesses the car.
• However, the value of the car has diminished significantly and does not cover the full amount you owe on your loan.
• Since this is a recourse loan, the bank can continue to hound you for payment, including taking out some of your wages each paycheck until the debt is fully repaid.

That is a worst-case scenario! Not only do you lose the car, but you are left paying back the loan you took out to buy the car in the first place. With a non-recourse loan, the most the bank can do is take the vehicle. Your personal finances would not be affected since you are not personally liable for a non-recourse loan.

What Non-Recourse Funding Does for Injury Claimants

We’ve discussed loans from banks, but what about the non-recourse pre-settlement legal funding from High Rise Financial? In this case, the “collateral” for the funds we provide is technically your eventual compensation package. 

When you win your lawsuit, we are paid a portion of your settlement (as example – labor lawsuit settlements) or jury award, and you keep the rest. Since we offer exclusively non-recourse funding, you don’t have to pay us back at all if you lose your case!

We also do not go after your personal finances for repayment, even if your compensation package does not cover the debt you owe us. That means:

• NO monthly payments
• NO compound interest
• NO risk to you

Deciding Whether You Need Non-Recourse Funding

The decision to get pre-settlement legal funding is in your hands, when it comes down to the wire. You should consider the specifics of your case and your financial need as you recover from your injury, but ultimately only you can decide if non-recourse funding is worth it. 

Still, there are several reasons many clients opt for non-recourse legal funding. Some of those common reasons include:

• Covering daily expenses, such as rent, mortgage payments, groceries, gas money, etc.
• Combating the opposing side’s negotiation stall tactics
• Paying for medical bills related to the injury

Personal injury claims can take months (or even years) before the injured person gets the compensation they deserve. Often, the at-fault party and their attorneys will stall negotiations, knowing your medical bills and expenses will pile up forcing you to agree to a lowball settlement offer.

Is Non-Recourse Funding Regulated?

Yes. It is regulated by the same laws as non-recourse loans. All lawsuit loans must be given in good faith and comply with the rules of the loan agreement. We also follow truth-in-lending laws by explaining clearly how the loan works during your consultation.

We do not use variable rates or other tactics that change the value of the loan in unexpected ways. What you see in the contract is what you’ll get, and our loan officers will be glad to speak with you about any of the details you’re uncertain about.

Complete a Free Application form now

What If I don’t Get a Loan?

There is no obligation to get any kind of funding for your lawsuit, recourse or non-recourse. Many people try to fight their lawsuits using their own assets. Unfortunately, many people don’t have the resources to fight a long lawsuit before financial pressures force them to settle early.

If you think you can ride the financial burden until your case is finished, you can skip a lawsuit loan. Yet if you do get one, you’ll have a lot more breathing room and less stress about your situation.

We’ve heard many stories of frustration from lawyers who were very close to getting larger settlements for their clients and had to stop just shy of the goal. We encourage you to talk with your lawyer about these loans before taking one. It could be what you and your lawyer need to push your case all the way.

Get the Help You Need Today

With pre-settlement legal funding from High Rise Financial, you can get the funds you require to ease that pressure and allow your lawyer the time they need to get you a better compensation package.

If you’re in the midst of a long personal injury claim, a non-recourse loan might be worth it for you. To get started, simply fill out the form on our Apply Now page, including information regarding your injury, expected compensation, and the attorney that represents you.

For questions or concerns about legal funding, the repayment process, or other issues, call our office or use our contact form and a member of our team will discuss your case with you.

Call or text (877) 735-0016 or fill out our form to apply today for free.