When someone is involved in a personal injury case, the financial strain can feel overwhelming. Bills don’t stop just because you’re waiting for a settlement, which is why many people start looking for options to help cover expenses. Two terms often come up in this process: lawsuit loans and plaintiff’s litigation funding. While they might sound similar, they are not the same.
How Lawsuit Loans Work
A lawsuit loan is a traditional loan. The borrower receives money and must pay it back, usually with interest, no matter the outcome of their case. This creates significant risk for the plaintiff because losing the case does not cancel the debt. In other words, you remain personally liable for repayment.
How Plaintiff’s Litigation Funding Works
Plaintiff’s litigation funding is very different. At Plaintiff’s Litigation Funding (PLF), clients receive non-recourse cash advances. This means repayment only happens if the case results in a successful settlement or award. If the case is not successful, the client owes nothing back.
The advance is repaid directly from the settlement, making the process less stressful and more manageable than carrying the burden of a loan.
Key Differences to Know
- Risk: Lawsuit loans require repayment no matter what. Litigation funding only requires repayment if the case is won.
- Structure: Lawsuit loans are debt. Litigation funding is an advance on a potential settlement.
- Peace of Mind: With litigation funding, plaintiffs can focus on their recovery and legal process without worrying about personal liability if the case is not successful.
Why It Matters for Plaintiffs
Understanding the difference helps plaintiffs choose the right financial solution. Litigation funding is designed to support injured individuals during the legal process without adding debt. For many, it can make the waiting period less overwhelming by providing funds for everyday expenses like rent, groceries, and medical care.
Final Thoughts
Although the terms are often confused, lawsuit loans and litigation funding are not the same. Plaintiff’s Litigation Funding provides non-recourse funding so that clients can access financial support while their attorneys work toward a fair settlement. Knowing this difference can make all the difference in protecting your financial stability during a lawsuit.