Pre-Settlement Funding: A Comprehensive Guide
Pre-settlement funding is increasingly becoming a viable option for people who are in the process of filing a lawsuit or legal claim. This type of funding allows a person to obtain an advance on the financial compensation they expect to receive when their claim is settled or won in court.
While pre-settlement funding can be a useful financial bridge for claimants in various types of legal cases, it is important to understand the different aspects of the process before considering this type of arrangement. This comprehensive guide will explore the basics of pre-settlement funding, including its advantages, disadvantages, types of legal claims, and qualifications for obtaining the funding.
What is Pre-Settlement Funding?
Pre-settlement funding is an advance on a future settlement or award of damages for a legal claim. It is intended for use by individuals pursuing various types of legal cases, including personal injury, medical malpractice, wage and hour disputes, and civil rights violations. Pre-settlement funds are usually provided to claimants in a lump sum or in periodic payments as an alternative to or as a supplement to a traditional loan.
The funds provided through pre-settlement funding are non-recourse, meaning that they are only due when the case is successfully resolved. This makes pre-settlement funding more appealing than other traditional loans as it allows claimants to receive the needed funds without having to personally guarantee the loan or risk their personal assets.
Advantages and Disadvantages of Pre-Settlement Funding
The primary advantage of pre-settlement funding is the ability to get a needed cash advance without the risk of having to personally guarantee a loan. With pre-settlement funding, funds are non-recourse, meaning that they only need to be repaid when the case is successful.
This type of arrangement allows claimants to avoid taking on additional debt while they pursue their legal case. It also enables them to use pre-settlement funds to help pay for expenses associated with their legal case without risking their own personal assets.
The primary disadvantage of pre-settlement funding is the cost. Since the pre-settlement funding provider is taking a risk by providing non-recourse funds, they will typically charge a high interest rate for the funds. Furthermore, the amount advanced is typically much less than the final settlement or award, meaning claimants will not receive the full amount of their settlement or award.
Types of Legal Claims
Pre-settlement funding is available for a variety of legal claims, including:
• Personal injury cases
• Wrongful death cases
• Medical malpractice cases
• Police brutality cases
• Employment discrimination cases
• Wage and hour disputes
• Civil rights violations
Qualifications for Obtaining Pre-Settlement Funding
The qualifications for obtaining pre-settlement funding depend on the type of legal claim and the particular pre-settlement funding provider. Generally, claimants must have an active and viable lawsuit with a meritorious claim that is likely to result in a settlement or jury verdict. They must also be able to demonstrate that the settlement or jury verdict is likely to exceed the cost of the pre-settlement funding.
The application process for pre-settlement funding typically involves providing the pre-settlement funding provider with copies of legal documents, medical bills, and other relevant materials. The pre-settlement funding provider then evaluates the case and determines if the claim is viable, what type of advance to offer, and what repayment terms are necessary.
Conclusion
Pre-settlement funding can be a useful financial bridge for individuals who are in the process of pursuing a legal claim or lawsuit. It is important to understand the advantages, disadvantages, types of legal claims, and qualifications for obtaining pre-settlement funding before considering this type of arrangement. By understanding all of the elements of pre-settlement funding and making an informed decision, claimants can gain access to the financial resources they need to pursue their legal claims.
