Pre-Settlement Funding: What You Need to Know
Pre-Settlement Funding is an increasingly popular option for those who are in the process of a lawsuit and may be in need of financial assistance during the wait for their case to be settled. It offers those in need an opportunity to receive an advance on their expected settlement, allowing them to cover any bills they may have while they wait for their legal case to be concluded.
Pre-settlement funding is offered by a variety of companies in the form of a cash advance. Those looking to secure funding will go through a short application process and, if approved, will receive their advance in a matter of days, though not always instantly. The amount of money received will depend on the facts of their case and the risks that the lender assumes, which may include the amount of money they will receive in the event of a win.
In some cases, the amount of money offered may be as little as a few hundred dollars and as much as a few hundred thousand dollars. This largely depends on the estimated settlement, who is offering the advance, and the type of case at hand. It is important to note that, depending on the terms of the agreement, a borrower may be responsible for any debts accrued as a result of taking out a loan before the settlement is received, such as legal costs or other expenses.
In addition, it is essential to be aware of the interest rates, fees, and repayment schedules associated with pre-settlement funding, as they will affect the amount of money that must be repaid. Most lenders will charge a set fee and interest rate, often based on the borrower’s credit risk. This fee and interest rate may vary from lender to lender and case to case and should be carefully assessed before committing to a particular loan.
It is also worthwhile to know that those receiving pre-settlement funding are not typically required to make any type of payments on the loan until the settlement is secured and the money has been received. Furthermore, any money not used for expenses related to the lawsuit will not have to be repaid.
It’s important to keep in mind that pre-settlement funding should not be relied upon as the primary source of income or as a long-term solution and should not be confused with a traditional loan. This is because the borrowed funds are taken out of the anticipated settlement, and those who take out a loan may be required to forfeit a portion of their settlement or pay back the loan entirely if they lose their case.
That said, pre-settlement funding can provide financial assistance to those who are awaiting their settlement and need assistance in the meantime. But before taking out any type of loan, it is essential to make sure that you understand the terms and conditions, fees and interest rates, repayment schedules, and risks involved in order to make an educated decision that best suits your individual situation.
