Pre-Settlement Funding for Auto Accident Cases: Is It Right for You?
When you are the victim of an auto accident, one of the most stressful aspects is dealing with insurance settlements. After all, you have mounting medical bills and may have suffered lost wages due to your injuries. While the legal system takes its time to come to a fair settlement, you are left without the funds necessary to cover your medical bills or other expenses. One way to bridge this gap is with pre-settlement funding for auto accident cases. Pre-settlement funding can provide the financial relief necessary to cover bills, food, and other expenses until the case is settled.
Pre-settlement funding is a type of financing provided to accident victims before their legal case against responsible parties is fully resolved and settlement funds have been received. This funding is in the form of a non-recourse cash advance, which means that if you do not win your case, you are not required to repay the cash advance. The lender, who is typically a third-party company, will examine your case and estimate what the potential settlement may be in order to decide whether or not to take the risk of the potential loss.
These advances are typically made within days and provide cash when it is most needed. The application process is typically much easier than with any type of traditional loan, as there is no credit check or proof of employment required to qualify. The funds are usually provided within a few days and are intended to provide temporary financial relief until your case is settled.
However, as with any type of funding, there are tradeoffs and potential risks to consider before opting for pre-settlement funding for auto accident cases. Since pre-settlement funding is a cash advance, there are typically high fees or interest rates associated with the loan, up to 25% or more. This means that if you rely on this kind of funding, you may not receive a large portion of the settlement, reducing the amount of money available to recover from an accident.
Additionally, these types of loans may reduce the amount of the settlement that your lawyer can negotiate since you will have already received the money from the lender. If the settlement amount is less than what the lender has advanced to you, the lender may take all or part of the settlement money to cover their expenses. Unfortunately, this type of funding does not guarantee a settlement or the outcome of your case.
Ultimately, pre-settlement funding for auto accident cases can be a helpful option for those who may not have other resources or who are struggling to cover medical expenses and other costs during long legal proceedings. However, it is important to understand the terms of the loan and the associated fees or interest before entering into an agreement. Be sure to discuss the potential tradeoffs with a knowledgeable attorney to determine if pre-settlement funding is right for you.
