When an individual is involved in a legal case and wins a legal case, they may be awarded compensation. This settlement, commonly called “Lawsuit Money,” can take many forms depending on the nature of the case and the damages incurred. Lawsuit money, also known as “Damages,” is an important key to civil cases.
We will learn more about lawsuit money or damages, in this article.
What Are Damages?
In case of Damages, the defendant has to pay money to the complainant only if the complainant wins the case. Due to the defendant’s actions, this cash is meant to compensate for the complainant’s injuries or losses. It’s also a way to punish the defendant or stop them from repeating the same thing. If you are interested to know more about lawsuit lingo? You should check out our article on what is the definition of a lawsuit.
Types of Damages
Damages have three types like compensatory, punitive, and nominal. In the legal game, each one has its own role.
Compensatory Damages
Compensatory damages have two categories: economic and non-economic.
| Compensatory Damages | Examples |
|---|---|
| Economic Damages | Medical Bills, Property Damage, Lost Wages |
| Non-Economic Damages | Pain and Suffering, Loss of Enjoyment of Life, and Emotional Distress |
check out our articles on what is a lawsuit example and what does getting sued mean.
Punitive Damages
Punitive damages, also known as exemplary damages. They punish the defendant for bad behavior and terrify others from doing the same. These are irregular and usually occur in cases of serious misconduct.
Nominal Damages
Nominal damages are a token amount of money that is given when a legal wrong happens, however, no big harm or financial loss occurs. It’s like a court nodding saying, “Yes, your rights were violated, even if it didn’t cost you a lot.”
The different types of damages can help you or your business understand the legal process better. If you are interested in more on related legal topics, then check out our articles on what a lawsuit example and what getting sued means.
Lawsuit Settlement Loans
How They Work
Lawsuit settlement loans give you cash upfront while you wait for a lawsuit to settle. It would help if you considered it a financial bridge to cover your living expenses or medical bills until your case wraps up. The loan amount is based on what your settlement is expected to be, and yup, interest piles up while you wait.
| Loan Amount | Annual Interest Rate | Interest Paid annually |
|---|---|---|
| $10,000 | 27% – 60% | $2,700 – $6,000 |
| $20,000 | 27% – 60% | $5,400 – $12,000 |
| $30,000 | 27% – 60% | $8,100 – $18,000 |
Here’s the method of how it works: You can apply for the loan through a lender who specializes in these types of loans. They take a closer look at your case and decide based on your potential settlement how much to lend you.
Once the loan is approved, you get the money and will need to pay it back, which includes the interest, once you get your settlement. Interestingly, your lawyer doesn’t have to sign off on this.
Risks and Considerations
They come with few serious strings attached, while lawsuit settlement loans can be a lifesaver. The sky-high interest rates, which can range from 27% to 60% per year (Investopedia). As an example, a $30k loan could gain $18,000 in interest per year, which makes it a hefty bill to pay back.
| Loan Amount | Annual Interest Rate | Interest Paid per Year |
|---|---|---|
| $30,000 | 27% – 60% | $8,100 – $18,000 |
Another significant risk is the option for shady lending practices. Lawsuit settlement loans aren’t regulated by the government, so lenders can slap outrageous fees and interest rates that are hard to pay back. In some major cases, interest rates can skyrocket to 250%, like in a lawsuit involving New York’s attorney general and the Consumer Financial Protection Bureau.
You consider these risks and other ways to get the loan, before jumping into a lawsuit settlement loan. If you are interested in more info on the differences between settlements and lawsuits.
You can manage your finances while waiting for your legal case to be resolved by understanding how these loans work and the risks involved.
