How does pre-settlement funding work?

Pre-settlement funding, also known as lawsuit funding, is a form of short-term financing used by individuals and businesses to obtain capital in anticipation of a pending legal settlement. The legal settlement financing is a non-recourse loan and is available to individuals who have filed a personal injury, medical malpractice, or other type of lawsuit. Potential claimants can use pre-settlement funding to meet their immediate financial needs and pursue justice without worrying about the financial burden of litigation.

In a pre-settlement funding agreement, the lawsuit funding company agrees to provide cash to the claimant in advance of a legal settlement. The amount of the pre-settlement funding is based on the strengths of the claimant’s case and is typically a small percentage of the estimated settlement amount. The lawsuit funding company charges a fee for the financing and works with the attorney representing the claimant to ensure the process is properly carried out.

The process for obtaining pre-settlement funding typically involves an application process and a review of the strength of the case. During the application process, the applicant, or their representative, must provide a detailed description of the case, the estimated amount of the settlement, and a copy of the lawsuit documents. Depending on the nature of the case, additional documentation may be required to prove the claimant’s case. The lawsuit funder then reviews the application and documents and decides whether to issue a loan for a portion of the pending settlement.

Once the pre-settlement funding has been approved, the funder disburses the funds to the claimant. The claimant then uses the funds as they wish. Because pre-settlement funding is a non-recourse loan, the claimant is not obligated to pay the funds back if the case is lost. However, if the settlement is reached, the claimant is responsible for paying back the loan, and the funder will receive payment from the settlement proceeds.

Pre-settlement funding is an attractive option for individuals who have filed a lawsuit and are in need of immediate funds to pay for medical bills and other costs that may arise during the litigation process. It is important to note, however, that pre-settlement funding is a form of short-term financing, and it can be difficult to qualify for the loan. Additionally, the funding company typically charges a fee for the loan, and the repayment plan should be discussed in detail before a funding agreement is signed.

Overall, pre-settlement funding can be a viable option for those pursuing justice through a legal lawsuit. It is important for individuals to understand the process, including the costs and qualifications for funding, before applying for pre-settlement funding. It is also advisable to discuss the option with a qualified attorney to ensure the best possible outcome for the case.