Financial Support When You Need It Most: The Benefits of Pre-Settlement Funding

By  //  May 15, 2023

ABOUT THE AUTHOR: With a BA in communications and paralegal experience, Irma Dengler decided to make the best of her writing skills.

She decided to turn complicated legal matters into something more palatable for the masses. Therefore, Irma became a law communicator who writes about everyday problems so everyone can understand them and take the appropriate action.

She specialized in personal injury cases, as they are more common than anyone thinks, but her areas of expertise also include civil law, criminal law, insurance-related issues, and more.

When you are involved in a lawsuit, it can be a lengthy and stressful process that can take a toll on your finances. Not only are you facing legal fees and other expenses, but you may also be dealing with medical bills, lost wages, and other costs associated with the incident that led to the lawsuit. This can leave you struggling to make ends meet and wondering how you will pay your bills while your case drags on – that’s where pre-settlement funding comes in.

Pre-settlement funding, also known as lawsuit funding, is a type of financial support that is designed to help plaintiffs who are waiting for their cases to settle. This funding provides plaintiffs with a portion of their potential settlement upfront, allowing them to pay their bills and other expenses while their case is pending. In this article, we will explore the benefits of pre-settlement funding and how we can help you get your settlement loan.

How Pre-Settlement Funding Works

Pre-settlement funding is not a loan, but rather a cash advance that is given to plaintiffs before their case is resolved. This funding is typically provided by third-party companies known as pre-settlement funding companies or lawsuit funding companies. These companies evaluate the strength of the plaintiff’s case and the likelihood of a favorable settlement or verdict before providing the funding.

The amount of pre-settlement funding a plaintiff can receive depends on the specifics of their case, including the potential settlement or verdict amount, the estimated length of the case, and the plaintiff’s financial needs. Typically, pre-settlement funding companies provide plaintiffs with a percentage of their expected settlement, ranging from 10% to 20% of the total amount.

If the plaintiff wins their case, they are required to repay the pre-settlement funding company the amount advanced, as well as any fees and interest charges. However, if the plaintiff loses their case, they are not required to repay the funding, as it is considered a non-recourse cash advance.

The Benefits of Pre-Settlement Funding

There are several benefits to pre-settlement funding that can help plaintiffs during the legal process. Here are some of the most significant benefits:

Access to Cash When You Need It Most

One of the primary benefits of pre-settlement funding is that it provides plaintiffs with access to cash when they need it most. When you are involved in a lawsuit, you may be facing mounting bills and expenses, and you may not have the resources to cover these costs. Pre-settlement funding can help you pay for medical bills, rent, car payments, and other expenses, allowing you to focus on your case without worrying about your finances.

No Upfront Costs or Credit Checks

Unlike traditional loans, pre-settlement funding does not require upfront costs or credit checks. Pre-settlement funding companies evaluate the strength of your case, not your credit score, before providing funding. This means that even if you have poor credit, you can still qualify for pre-settlement funding.

Non-Recourse Cash Advance

Pre-settlement funding is a non-recourse cash advance. This means that if you lose your case, you are not required to repay the funding. The pre-settlement funding company assumes the risk that you may not win your case, and they do not expect to be repaid if you lose.

No Monthly Payments

Unlike traditional loans, pre-settlement funding does not require monthly payments. Instead, the funding is repaid once your case is settled or resolved. This means that you do not have to worry about making payments while you are waiting for your case to be resolved.

Ability to Negotiate a Better Settlement

Pre-settlement funding can also give plaintiffs the ability to negotiate a better settlement. When plaintiffs have access to cash, they may be more willing to hold out for a larger settlement. This can be particularly beneficial if the defendant is offering a low settlement amount, and the plaintiff is struggling financially. 

With pre-settlement funding, plaintiffs can afford to wait for a better settlement offer, which can ultimately result in a larger payout.

Reduced Stress and Anxiety

Lawsuits can be incredibly stressful, and the financial burden can only add to this stress. With pre-settlement funding, plaintiffs can reduce their stress and anxiety by having the financial support they need to cover their expenses. This can allow them to focus on their case and their recovery, rather than worrying about how they will pay their bills.

Who Can Benefit from Pre-Settlement Funding?

Pre-settlement funding is not for everyone, and not all plaintiffs will qualify for this type of funding. However, if you are involved in a lawsuit and are struggling financially, pre-settlement funding may be a good option for you. Here are some examples of plaintiffs who may benefit from pre-settlement funding:

  • Personal injury plaintiffs: If you have been injured in an accident and are pursuing a personal injury lawsuit, pre-settlement funding can help you cover your medical expenses, lost wages, and other costs associated with your injury.
  • Employment law plaintiffs: If you have been wrongfully terminated or have experienced discrimination or harassment in the workplace, pre-settlement funding can help you cover your bills and expenses while your case is pending.
  • Product liability plaintiffs: If you have been injured by a defective product, pre-settlement funding can help you cover your medical expenses and other costs associated with your injury.

We Can Help You

Lawsuits can be incredibly stressful, and the financial burden can only add to this stress. Pre-settlement funding can help alleviate some of this stress by providing plaintiffs with access to cash when they need it most. With pre-settlement funding, plaintiffs can cover their expenses and focus on their cases without worrying about their finances. 

If you are involved in a lawsuit and are struggling financially, pre-settlement funding may be a good option for you. However, it is essential to understand the terms and conditions of the funding before accepting it.

By doing so, you can make an informed decision and get the financial support you need during this difficult time.