What are litigation loans?


The process of litigation has been seen as being a very time-consuming and costly one. Litigation is an issue that you can be confronted with at any time. It may arise in civil, commercial, family or criminal situations to name just a few. If you have suffered damages or personal injury because of another individual you can file a lawsuit against them, but it can be a very costly process. Savings and investments may sometimes not suffice to fight a case until the end. It is at these times that litigation-financing companies can help you by providing you with a litigation loan.

Litigation loans differ from a regular financial loan. They are seen as an investment, or an advance offered to an individual who needs that help at that time. The way a litigation loan works is slightly complex. The loan company will take on part of the client’s risk – they will receive a percentage of the winnings made by the individual from the final settlement, but if the return made by the individual doesn’t cover the loan then the company too will suffer a loss.

Litigation loans can also be personal or true loans. These loans are recourse in nature unlike the litigation loan discussed above, but aren't as readily available as only a few companies offer them. Individuals also do not favour these kinds of litigation loans as they are based on the sources of income, bank balances, credits etc. The individual will also have to make a monthly payment to the company. The biggest negative of these sorts of loans is that they are recoverable by the company whether the individual loses or wins the case.

If you would like to obtain legal advice on litigation loans then Caven can put you in touch with a local litigation solicitor free of charge. So, if you have any questions or would like our help in finding local litigation solicitors please call us on 08001 221 2299 or complete the web-form above.

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