Pre-settlement funding, also known as a lawsuit advance, gives plaintiffs access to money before a case is settled so they can pay for expenses mounting during the legal process.
If you’re suing for damages in a personal injury or medical malpractice claim, your case could take months or years before a decision is made. Life goes on in the meantime, and you may have mounting medical bills, lost wages from missed work and everyday responsibilities like groceries to pay for. You may find yourself strapped for cash and when you do, it can be tempting to settle out of court for less than you deserve.
Many people use pre-settlement funding as the solution to this problem.
You could get cash before you reach a verdict, which can be used to pay medical bills, purchase groceries and replace lost income due to a personal injury while your case plays out in court. Finding out if you qualify is easy and will not damage your credit.
A lawsuit advance or pre-settlement funding occurs when plaintiffs are advanced money from a court award before the final decision is made. Rather than going into debt, rushing for a verdict or accepting a smaller settlement, you get funds right away.
Court cases can take months or even years, possibly exposing you to:
Traditional banks and credit bureaus do not give loans based on expected settlements; however, a settlement advance company will. If you win your case, the amount you were advanced, minus agreed-upon interest charges, will go to the company. If the case does not settle in your favor, you will owe nothing.
When you arrange for pre-settlement funding, you can have cash in your hand within 24 – 48 hours. The steps are as follows:
Having a strong case is crucial for qualification. Because companies take on the risk of a lawsuit not settling in a client’s favor, not everyone qualifies for pre-settlement funding.
Cases that may be eligible for pre-settlement funding include:
Your attorney and the company you choose will complete the process of evaluating your case. You must have retained an attorney and filed a mature claim for lawsuit advance eligibility. Mature claims involve a plaintiff with a serious injury, strong merits against the defendant and an attorney working on a contingency basis.
If these prerequisites are met, then your attorney can consent to the pre-funding transaction, and the deal can move forward.
The company who provides your pre-settlement funding shoulders the most risk because if your case falls through, they lose the money they gave you. This is called getting cash on a non-recourse basis.
You will have much less risk, but still should pay attention to interest rates, or the amount the pre-settlement funding company will charge you to borrow the money in advance.
There are also some red flags you should look for to avoid shady companies. Make sure the group you work with offers low interest rates and a quick turnaround time to give you your cash.
Our partners at Annuity.org, for example, have a no-hassle promise:
The application process should be simple and the company should be willing to answer all of your questions before rushing you into a decision. They should also guarantee your privacy, regardless of how the case turns out.
Post-settlement funding is similar to pre-settlement funding, except it comes after the court has made its decision. After your case is settled, it may take time to get money in your bank account. Certain situations can complicate getting everything finalized, such as:
Sometimes only a portion of your funds are accessible. Reaching a settlement doesn’t guarantee you will be paid immediately. Many companies offer post-settlement funding, which is more widely available than pre-settlement funding because the case has already been won.
If you need help finding a post-settlement funding company, or have questions about settlement advances, our experienced financial experts can help. Call us at 888-315-6498 so we can help you understand when you can expect your money and help you get a fair quote.