Pre-settlement advances are an essential resource for plaintiffs facing financial difficulties during the litigation process. They provide immediate relief without the burden of monthly payments and are risk-free if the case is lost.
However, it’s crucial to be mindful of the associated costs and the potential impact on your final settlement. If you decide that pre-settlement funding is right for you, make sure to carefully evaluate your options and work with a reputable company.
Let’s take a look at what you need to know about pre-settlement advances.
How Pre-Settlement Advances Work
A pre-settlement advance is essentially a cash loan provided to a plaintiff before their lawsuit is settled or goes to trial. In exchange, the funding company provides a lump sum that is repaid once the case reaches a conclusion, whether through a settlement or court award.
- Repayment. Unlike traditional loans, repayment is contingent on the outcome of the case. If the plaintiff loses the case, they do not owe the funding company any money. If the case is won or settled, the funding company receives a portion of the award.
- Non-recourse. Pre-settlement advances are considered “non-recourse” loans, meaning the plaintiff is not required to pay back the loan if the lawsuit is unsuccessful.
Eligibility for Pre-Settlement Funding
Not all cases qualify for pre-settlement funding. Generally, the funding company will evaluate the merits of the lawsuit to assess the likelihood of winning. Common cases that qualify for pre-settlement funding include:
- Personal injury lawsuits
- Medical malpractice claims
- Employment discrimination lawsuits
- Product liability cases
- Car accident lawsuits
The funding company typically requires the following information to approve the advance:
- A review of the case’s potential outcome (usually based on the legal team’s opinion)
- A signed agreement between the plaintiff and their attorney
- Documentation of the plaintiff’s financial need (although this is less critical than the case’s merits)
How Much Can You Receive in Pre-Settlement Funding?
The amount a plaintiff can receive varies depending on several factors:
- Case Evaluation: The strength and expected outcome of the case play a significant role in determining how much funding is offered.
- Risk Assessment: The risk of losing the case can affect the loan amount. Stronger cases may receive larger advances.
Cost of Pre-Settlement Funding
Pre-settlement advances generally do not carry interest like traditional loans, but the cost is embedded in the fees charged by the funding company. This can be higher than typical interest rates due to the risk the funding company assumes. Key points about the cost include:
- Fees. Pre-settlement funding is typically charged as a percentage of the lawsuit’s final settlement or judgment.
- No Monthly Payments. Plaintiffs do not have to make any payments during the lawsuit. The repayment comes from the settlement or judgment amount.
- Compound Fees. If the case takes a long time to settle, the fees may compound, increasing the total repayment amount.
Advantages of Pre-Settlement Funding
- Immediate Access to Cash. This can be a life-saver for plaintiffs who are struggling with medical bills, living expenses, or other financial obligations while waiting for a settlement.
- No Risk if You Lose. If the case is unsuccessful, the plaintiff does not have to repay the loan. This makes it a risk-free option for those who cannot afford traditional loans or credit.
- Helps You Avoid Settling Too Early. With access to cash, plaintiffs are less likely to feel pressured to settle their case early for less than it’s worth.
Legal Funding From Cash Now Funding Group
Are you or a family member in need of financial assistance due to a lengthy legal battle? Are you preparing for a long-term legal battle to get the compensation you deserve? Cash Now Funding Group can be the financial lifeline you need while your case settles. Applying is free and confidential & no credit check is required.
