The term lawsuit settlement loan is actually a misnomer of sorts because they are not classified as loans for legal purposes. In most cases, they are classified as a non-recourse cash advance. Funds are distributed only to people with pending lawsuits. The funds are used to help the plaintiff meet financial obligations until the case is settled in court. According to an online search of finance companies, cash advances can be obtained for lawsuits of just about any sort: motor vehicle accident, slip and fall, product liability, construction accidents, medical malpractice, false imprisonment, and commercial litigation. Non-recourse means that the person receiving the cash advance is not required to repay the money if the case is not won. Adjustments are made to the amount that must be repaid, if the case is won, but the settlement is less than anticipated. The process is really simple, if a person wins their case the amount of the advance along with fees are paid directly to the finance company out of the settlement, judgment, or award. But, if a person doesn't win in court, he or she doesn't have to pay. Even if a lawsuit settlement loan is not classified as a loan for legal purposes, remember what Proverbs says. The rich rule the poor and the borrower is servant to the lender. Generally, a person must be a plaintiff and he or she must be represented by an attorney. After the initial paperwork is submitted, a finance company will contact the attorney. The two parties discuss the case and estimate the value of the settlement. If the financial provider determines that the case is likely to be won, funds will usually be distributed within twenty-four to forty-eight hours. Again, these types of financial transactions are not loans. Credit is not extended and they do not go on a person's credit report. In a sense, the finance company is speculating on the outcome of the court case. Therefore, a lawsuit settlement loan is considered high risk, so the transaction fees can be significant. The charge may be a single flat fee paid once the case is won. On the other hand, the finance company may charge a fee each month the lawsuit settlement loan is outstanding. Some court cases can take years to settle, and monthly fees accrue quickly. Finance companies may charge the monthly fee for each month beginning when the funds are issued and when it is finally recouped by the company. Fees may be as high as 15 percent per month. As a result, once the case is settled the fees can be quite significant. All cases vary, and the amount of money a person may be advanced will vary as well. Advances generally range anywhere from under $1,000 going up to $75,000. But some finance companies will advance up to $100,000 under certain circumstances. A lawsuit settlement loan may be a good choice during times of hardship, such as when a person is unable to work, his or her income has been significantly reduced, or if they need help paying health-care expenses. But, a lawsuit settlement loan should be considered a last resort. Take a long close look at the hardship and determine if this course of action is desirable. If the case is won, a large portion of the settlement is going to the finance company. That makes the borrower a servant to the finance company. Money and worldly possessions don't make for true wealth and they don't necessarily relieve hardship. However, being rich in God does. "But in all things approving ourselves as the ministers of God, in much patience, in afflictions, in necessities, in distresses, in stripes, in imprisonments, in tumults, in labours, in watchings, in fastings; By pureness, by knowledge, by longsuffering, by kindness, by the Holy Ghost, by love unfeigned, By the word of truth, by the power of God, by the armour of righteousness on the right hand and on the left, by honour and dishonor, by evil report and good report; as deceivers, yet true; as unknown; as dying and, behold, we live; as chastened, and not killed; As sorrowful, yet always rejoicing; as poor, yet making many rich; as having nothing, and yet possessing all things." (2 Corinthians 6:4-10) Other funding options should be sought first. Financial and legal experts suggest that a person should shop around first before deciding on this type of funding. If a person does decide to pursue a settlement loan, they should investigate several companies. As it was mentioned earlier in the article, a lawsuit settlement loan is not actually classified as a loan. If they were, the finance company would not be able to charge the fees they do. Since the transactions are high risk, high fees are necessary. Without charging high fees to offset the risks, companies couldn't offer them. Most states have what are called usury laws, which are designed to prevent lenders from charging excessive interest rates on loans. Basically, if the interest rate exceeds a set percentage for certain types of loans, then under the usury law it is considered to be an illegal contract and cannot be enforced. For the most part, a lawsuit settlement loan will be referred to as a pre-settlement funding, cash advance, investment, or venture capital. According to an online legal website, financial groups can get around the usury laws because the contract is set up so the person being provided the funds does not repay the amount received. He or she will pay only a portion of any settlement received.