If you are considering applying for a lawsuit loan, there is a source of cash you may not be aware of. If you have a self-funded retirement account, such as an IRA, SEPTA-IRA or Roth IRA, you can borrow against these to access cash.

If you pay the money back in six months (it is possible that your lawsuit will settle within that time), there is no penalty and no tax liability. If you do not pay back the money, you must pay tax on the funds as if it were regular income, and there will be an early-withdrawal penalty you will also have to pay.

If you do not have a self-funded retirement, this is not an option. But if you do, it is worth talking to your tax or financial adviser about using these funds to cover your living expense while you await a settlement of your lawsuit.

There is some truth to the saying that banks only lend money to those who do not need it. Businesses in need of working capital know this only too well. When business is good, and the company has money in its checking account, the local bank wants to loan them money. But wait a few months or a year, and now the business is short of cash, and the local bank is not making loans!

For the business that is a plaintiff in a commercial lawsuit, there may be silver lining in that cloud. A commercial lawsuit loan can be a source of working capital that does not have to be re-paid unless and until the company wins its lawsuit! And unlike any bank loan, lawsuit loans do not require personal guarantees by the owners of the business!

It is no surprise to anyone that lawsuit loans are expensive. They are more expensive that conventional bank loans because the lawsuit loan company is taking a considerable risk. Companies that make lawsuit loans ONLY get repaid if and when the recipient of the loan wins his or her lawsuit. That is why instead of interest, lawsuit loans come with a "risk premium".

The distinct advantage is what lawsuit loans do not have – monthly payments! Let’s say you are the plaintiff in a personal injury lawsuit, you’ve been out of work, and you get a bank loan to cover your living expenses. The problem with any type of conventional loan is that it includes a monthly payment. So now, in addition to having to pay the rent, car payment and utilities, and put groceries on the table, you have yet another monthly payment!

A lawsuit loan does NOT create yet another bill each month that has to be paid! That adds considerable value, and more than pays for the extra cost!