What a Lawsuit Loan Is
A lawsuit loan is money a lender gives you while your personal injury or civil case is pending. You do not repay it from your own income — you repay it only if you win or settle your case, and only from the money you receive. If you lose, you owe nothing. The lender takes the repayment directly from your settlement or judgment, before you see the funds.
These loans exist because civil cases can take months or years to resolve, and many people cannot afford to wait. A lawsuit loan lets you cover medical bills, rent, or living expenses while your case moves through court. The trade-off is that the cost is steep: interest rates and fees are much higher than traditional loans, and they compound while you wait for resolution.
Lawsuit loans are also called litigation financing, case loans, or settlement advances. They are different from attorney contingency fees (where your lawyer takes a percentage of your winnings) and different from personal loans, which require you to repay them regardless of your case outcome.
Key Takeaways
- You repay a lawsuit loan only if you win or settle your case, and only from the money you receive — if you lose, you owe nothing.
- Lawsuit loans carry interest rates and fees that can total 30 to 50 percent or more of the amount borrowed, depending on how long your case takes.
- The lender pays your settlement or judgment directly, deducting their repayment before you receive any funds.
- Most lawsuit lenders require your attorney's approval and a reasonable chance of winning before they will fund your case.
- You can borrow against personal injury cases, employment disputes, medical malpractice, product liability, and some other civil claims, but not criminal cases.
How the Cost Works
Lawsuit loan costs are not quoted as a straightforward interest rate. Instead, lenders charge a fee — typically 25 to 50 percent of the amount you borrow — plus interest that accrues while your case is pending. A lender might charge you 30 percent upfront and then 1.5 to 3 percent monthly interest on top of that. The longer your case takes, the more you owe.
If you borrow $5,000 and your case takes two years to settle, you might owe $8,000 or more by the time the settlement arrives. The exact cost depends on the lender, the amount borrowed, how long the case takes, and how strong your attorney thinks your case is. Stronger cases often may have access to for lower fees because the lender's risk is lower.
Because the repayment comes directly from your settlement, you do not make monthly payments yourself. The lender straightforward deducts what you owe from the settlement check before it reaches you. This means you never have to worry about missing a payment, but it also means you have no control over when or how much is taken.
Who Can Get a Lawsuit Loan
You must have an active civil case with an attorney. Lenders will not fund cases where you are representing yourself, and they will not fund criminal cases. The types of cases that commonly may have access to include personal injury (car accidents, slip and fall, workplace injury), medical malpractice, employment disputes (wrongful termination, discrimination), product liability, and premises liability.
Your attorney must agree to the loan and confirm that your case has a reasonable chance of winning. Lenders contact your attorney directly to assess the case strength and to arrange the repayment deduction from your settlement. If your attorney thinks your case is weak or unlikely to settle soon, the lender will probably decline.
You do not need good credit to may have access to for a lawsuit loan. Lenders base their decision almost entirely on the case itself, not on your credit history or income. This makes lawsuit loans available to people who cannot borrow through traditional channels, but it also means the cost is higher because the lender's only security is the case outcome.
The process and Approval Process
Contact a lawsuit lender directly by phone or online. You will need your attorney's name and contact information, details about your case (the type of claim, when it was filed, who the defendant is), and the amount you want to borrow. The lender will then contact your attorney to verify the case details and assess whether they will fund it.
Your attorney will receive a questionnaire asking about the case status, the likelihood of winning, the expected settlement range, and how long the case is likely to take. This conversation is confidential between your attorney and the lender — your attorney does not need your permission to discuss the case with a lender you have approached. However, your attorney can refuse to cooperate if they believe the loan is not in your interest.
If the lender approves your case, you will receive a contract spelling out the fee, the interest rate, the amount you are borrowing, and the repayment terms. Read this carefully: some contracts include clauses that let the lender take repayment even if you lose, or that charge you extra fees if your case settles for less than expected. Once you sign, the lender typically funds the loan within a few business days, usually by direct deposit or check.
What Happens When Your Case Settles
When your case reaches a settlement or judgment, your attorney's office is responsible for collecting the funds. The settlement check usually goes to your attorney's trust account first. Your attorney then deducts their contingency fee (if applicable), any court costs or liens, and the lawsuit loan repayment. What remains goes to you.
The lawsuit lender has a legal claim on the settlement, meaning they get paid before you do. If your settlement is $50,000 and you owe the lender $12,000, you will receive $38,000 (minus your attorney's fee and any other deductions). You have no say in this order — the lender's repayment is automatic and comes directly from the settlement.
If your case is dismissed or you lose at trial, you owe the lender nothing. The loan is forgiven, and you walk away with no debt. This is the key difference between a lawsuit loan and a traditional loan: your obligation ends if the case does not succeed.
Alternatives to Lawsuit Loans
Before taking a lawsuit loan, explore other options. If your attorney works on contingency (taking a percentage of your winnings instead of an upfront fee), you may not need to borrow at all — your attorney is already betting on your case. Talk to your attorney about whether they can advance costs like medical records or informed witness fees, which some attorneys do.
Personal loans from banks or credit unions are cheaper if you have decent credit and stable income, though you will have to repay them even if your case loses. Credit cards or lines of credit are also options, though they carry their own risks. Some nonprofits and legal aid organizations offer emergency financial information to people in civil cases; ask your attorney whether any are available in your area.
If you are struggling with when ready expenses, ask your attorney whether the defendant's insurance company will agree to an interim payment or advance. Some will, especially in strong cases. This is not common, but it costs nothing to ask.
Red Flags and What to Avoid
Be cautious of lenders who pressure you to borrow more than you need or who promise a specific settlement amount. Legitimate lenders will not may provide an outcome or push you toward a settlement you do not want. They should be transparent about all fees and interest rates upfront, in writing.
Avoid lenders who will not let you speak to your attorney or who bypass your attorney entirely. A reputable lender always coordinates with your attorney and gets their written approval. If a lender is evasive about costs or refuses to put terms in writing, walk away.
Do not assume that taking a lawsuit loan will speed up your case. Some people borrow money hoping to pressure their attorney into settling faster, but that is not how it works. Your attorney's job is to get you the best outcome, not the fastest one. A lawsuit loan is a tool for managing expenses while you wait, not a way to change the timeline.
Frequently Asked Questions
Can I borrow against a case my attorney says is weak?
Unlikely. Most lenders will decline weak cases because their only security is the settlement. Your attorney's assessment of case strength is the main factor in a lender's decision. If multiple lenders turn you down, that is a signal that your case may not be strong enough to justify the cost of borrowing.
What if I want to settle my case for less than the lender expects?
You can still settle for whatever amount you and the defendant agree to. The lender cannot force you to hold out for a higher settlement. However, if the settlement is smaller than expected, you will owe the lender the full amount they are owed, which may take a larger chunk of your winnings. Discuss settlement strategy with your attorney before borrowing.
Do I have to tell my employer or creditors that I took a lawsuit loan?
No. A lawsuit loan does not appear on your credit report and does not affect your credit score. It is a private agreement between you, the lender, and your attorney. You do not have to disclose it to employers, landlords, or other creditors.
What if my attorney leaves the case or retires?
Your new attorney will step in and handle the settlement process, including the lender repayment. The lawsuit loan contract stays in effect regardless of which attorney represents you. Make sure your new attorney knows about the loan so they can factor it into settlement negotiations and may support the lender is paid correctly.
Can I get a lawsuit loan if I am already receiving workers compensation?
It depends on the case. If you are suing a third party (not your employer) while receiving workers compensation, you may be able to borrow against that third-party claim. However, workers compensation liens may take priority over the lawsuit loan repayment. Discuss this with both your attorney and the lender before borrowing.