Pre-Settlement Funding
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Over $100 Million Recovered For Our Clients
How Does Pre-Settlement Funding Work?
If you’re a plaintiff awaiting a lawsuit settlement, the process can feel long and financially draining. Medical bills, lost wages, and other expenses don’t pause while you wait for legal proceedings to conclude. Pre-settlement funding serves as a financial lifeline for individuals caught in these situations. Not sure what it is or how it works? Here’s an in-depth guide to help you understand.
What Is Pre-Settlement Funding?
Pre-settlement funding, also known as lawsuit funding or lawsuit loans, isn’t technically a loan. It’s a cash advance provided to plaintiffs in pending lawsuits who need financial assistance before their cases settle. The funding is repaid through the settlement amount once the case is resolved. If you lose the case, you generally don’t need to repay the money—making it a non-recourse financial solution.
The goal of pre-settlement funding is to help plaintiffs cover essential costs, such as medical bills, rent, or daily living expenses, while they wait for a fair settlement.
How Does the Pre-Settlement Funding Process Work?
1. Applying for Funding
The application process starts with submitting some basic details about your case. Here’s what you typically need to provide:
- A description of your case (e.g., personal injury, workers’ compensation, medical malpractice).
- Contact details for your attorney.
- Details on your medical expenses, lost wages, or other financial strain caused by your case.
Most pre-settlement funding companies work directly with your attorney to review the case documentation, so they can assess your potential settlement amount.
2. Approval Timeline
Once the company reviews your application, approval can happen quickly—often within 24-48 hours. This rapid approval process ensures that plaintiffs receive financial relief when they need it most.
3. Determining Funding Amount
The funding amount depends on various factors, including:
- The estimated value of your settlement.
- The strength of your case.
- The extent of damages (e.g., medical bills, lost income, pain and suffering).
Typically, pre-settlement funding companies provide a percentage of your expected settlement, such as 10-20%, to ensure there’s enough of the settlement left over to cover other expenses.
4. Fees and Interest Rates
It’s important to understand that pre-settlement funding isn’t free. Providers charge fees and interest rates on the cash advance. These costs vary by company, so shopping around for the best terms is critical.
How Is Pre-Settlement Funding Different from Traditional Loans?
Unlike traditional loans, pre-settlement funding is non-recourse, meaning you only repay the advance if you win your case. With a loan, repayment is mandatory regardless of the outcome of your legal action.
Another major difference is that credit scores and personal income don’t affect your eligibility for pre-settlement funding. Instead, approval is based solely on the details and anticipated outcome of your lawsuit.
Risks and Benefits of Pre-Settlement Funding
Potential Benefits:
- Immediate Financial Relief: Provide funds to cover essential expenses while waiting for your settlement.
- No Upfront Costs: You only repay the amount if you win your case.
- More Time for Better Offers: Financial stability allows you to resist low settlement offers and wait for a more favorable deal.
Potential Risks:
- Fees and Interest Rates: Costs can add up if your case takes a long time to resolve.
- Reduced Settlement Amount: Repaying the advance with fees will eat into your remaining settlement funds.
- Dependency Risk: Over-borrowing may lead to financial strain later.
When Is Pre-Settlement Funding a Good Idea?
Here are scenarios where pre-settlement funding can be especially helpful:
- A personal injury plaintiff struggling to pay medical expenses.
- A plaintiff forced to miss work due to accident-related injuries.
- Family breadwinners unable to pay rent, utilities, or childcare costs during a lengthy settlement process.
For example, let’s say you’re involved in a car accident case and unable to work due to your injuries. Medical bills are piling up, and you’re struggling to make ends meet. Pre-settlement funding can give you the financial breathing room to focus on recovery while your attorney works toward securing a fair settlement.
Best Practices for Using Pre-Settlement Funding Responsibly
To ensure pre-settlement funding benefits you without creating additional financial burden, follow these tips:
- Borrow Only What You Need: Stick to the essentials like medical bills, rent, and daily living expenses.
- Shop Around for Better Terms: Compare fees and interest rates across multiple providers.
- Discuss with Your Attorney: An experienced lawyer can help you assess whether pre-settlement funding is the best option for your case.
How Does Repayment Work?
Repayment is straightforward. Once your case settles and you receive your settlement amount, your attorney will deduct the pre-settlement funding advance along with any associated fees and interest before disbursing the remaining balance to you.
If you lose your case, however, you’re not required to repay the funding. This risk-free setup (for plaintiffs) is what sets pre-settlement funding apart from traditional borrowing options.
Common Questions About Pre-Settlement Funding
Pre-settlement funding is non-recourse, meaning repayment is not required if you lose your case. Loans, on the other hand, must always be repaid with interest.
Most personal injury cases qualify for pre-settlement funding, including car accidents, medical malpractice, product liability, and workers’ compensation cases.
Typically, you can secure 10-20% of your estimated settlement value.
Key information includes case type, attorney contact details, and documentation of damages.
No, funding companies do not charge upfront fees. Repayment happens only after the case settles.
If you lose, you owe nothing. The funding is non-recourse, which protects plaintiffs from financial loss.
Most approvals occur within 24-48 hours after submitting your application.
Yes, pre-settlement funding companies typically collaborate directly with your attorney throughout the process.
Pre-settlement funding offers a lifeline for plaintiffs navigating financial stress while waiting for their cases to settle. By understanding the risks and benefits, borrowing responsibly, and working with your attorney, you can leverage this financial tool to regain stability and focus on achieving the best outcome in your lawsuit.
Apply for Pre-Settlement Funding and Get Your Cash Advance Within 24 Hours of Approval
Please fill out the form below to apply for Pre-Settlement Funding or call us at (844) 410-9191