Pre-Settlement Funding: What You Need to Know Before You Apply
What is Pre-Settlement Funding?
Pre-settlement funding is a type of legal financing that allows plaintiffs to access funds before their case is settled. Pre-settlement funding is also referred to as “lawsuit funding” or “litigation financing.” Pre-settlement funding is a risk-free, non-recourse option that provides cash to plaintiffs while they wait to receive settlement money. This type of legal financing is designed to help plaintiffs who are experiencing financial hardship while they wait for their case to settle.
How Does Pre-Settlement Funding Work?
When pre-settlement funding is obtained, a company advances a portion of the expected settlement amount to the plaintiff in exchange for a lien on the future settlement. The plaintiff then repays the lender once their case is settled. Usually, the payment plan is structured so that the plaintiff does not owe any money unless their case is successful.
The amount of funding a plaintiff can receive typically ranges from $500 to $500,000, and requirements vary from company to company. Generally, the amount of pre-settlement funding depends on the strength of the plaintiff’s case and the potential value of the settlement or judgment.
Who is Eligible for Pre-Settlement Funding?
Pre-settlement funding is available to individuals who have a pending claim or are in the process of filing a lawsuit. Typically, plaintiffs pursue pre-settlement funding to help with medical bills, lost wages, and legal bills while they wait for their lawsuit to settle.
In order to be eligible for pre-settlement funding, plaintiffs must have an attorney representing them, and the case must be legally sound. Individuals seeking pre-settlement funding must provide evidence that their case has merit. This usually includes legal documents and evidence such as medical records and documents, employment records, and police reports.
What are the Risks of Pre-Settlement Funding?
Although pre-settlement funding can be a great option for individuals looking for financial relief while they wait for their lawsuit to settle, there are some risks associated with this form of financing.
The most significant risk is that if the plaintiff’s case is unsuccessful and they do not receive any compensation from the lawsuit, the plaintiff will still need to repay the amount borrowed. In addition, pre-settlement funding typically comes with higher than average fees, since the lender is taking on a greater risk. For this reason, it is important to understand the terms and conditions of the agreement before signing anything.
What Should You Consider Before Applying for Pre-Settlement Funding?
If you are considering applying for pre-settlement funding, there are a few factors to consider before making a decision. Firstly, it is important to compare different pre-settlement funding companies to find the one that works best for your needs and provides the best terms.
In addition, it is important to talk to your attorney to understand the strength of your case, as this will determine the amount of funding you can receive. Lastly, it is important to read the terms and conditions of the agreement carefully and make sure you understand the repayment terms before signing anything.
Conclusion
Pre-settlement funding can be a great option for individuals looking for financial relief while they wait for their lawsuit to settle. Understanding the risks and considerations associated with pre-settlement funding is essential for making an informed decision. By taking the time to compare different pre-settlement funding companies, talking to an attorney about the strength of the case, and reading the agreement carefully, individuals can make sure they are getting the best care and terms.
