Let’s face it. Times are tough. With many businesses temporarily shut down due to COVID19, you may find yourself suddenly out of work. Your bills don’t care about a virus, and now you might be left with no way to pay them on time.
But if you are a plaintiff in an active lawsuit, an imminent cash settlement may seem like the answer to all your troubles. While it’s good to be optimistic regarding the outcome of your case, the truth is that you may be in for a long wait. The court system is normally sluggish to begin with, but with non-essential municipal activity being halted across the country, your lawsuit may now languish for years. The cash settlement you’ve been counting on might have been the only money coming in over the foreseeable future, and now you’ve been put in the position of having to wait indefinitely.
Even when you are confident about your odds of winning a cash settlement, the time until you receive it can put immense stress on your wallet. You may be wondering how your finances will survive until your case settles, stuck in limbo as your bank account gets drained.
Luckily there is a way for you to obtain a cash settlement now, without having to wait. It’s called “case funding” and can get you your money well in advance of your expected settlement. Read on to see if an early cash settlement is the right choice for you.
What’s the point in taking out a cash settlement in advance of my case?
The number one reason that people take advantage of settlement funding from their pending lawsuit is to pay their bills. Whatever those bills may be: Mortgage, rent, car payment, utilities, college tuition, medical expenses, back-to-school costs… Even for starting a new business or shopping online; anything that the consumer wants to use the money for, they can. The choice is up to them to decide if taking an advance on their cash settlement is important to their needs at this time.
Why wouldn’t I just take out a bank loan?
If you are looking for financial relief in your time of need, the last thing you’d want to do is add to your debt. But if you have a pending lawsuit and need money before your case settles, you may be in the process of researching a bank loan when a cash settlement loan would benefit you more. A cash settlement is a way to get money from your lawsuit before it’s settled, also known as a “pre-settlement loan.” But in actuality, a pre-settlement loan isn’t like a bank loan at all, and a much better option for a way to obtain some much-needed cash.
The reason why is because there is no recourse from the funding company if your lawsuit ultimately fails. That means you don’t have to pay back the cash settlement money if you lose your case. No monthly payments; no interest fees. This is part of the risk that companies will assume in providing you with a cash settlement in advance of a final ruling on your case.
With a bank loan, the borrower has to have collateral and credit and be prepared to incur fees and interest charges. Since a cash settlement loan is not like a bank loan, credit approval isn’t needed to qualify. Cash settlements are based entirely on the merits of the case, and nothing else.
Also, many people who are injured and out of work cannot obtain traditional loans, so cash settlement loans are their only option. Plus, they are much faster. If someone applies for a bank loan or new credit card, those processes could take weeks, if not months. Lawsuit settlement funding companies can have you approved for a cash settlement in just days.
How many days are we talking about here?
If you’re dealing with an efficient funding company, the time from application to cash-in-hand can be as little as 48 hours. In most cases, you can receive a cash settlement within 24 hours of sending back a fully executed agreement that is signed by you and your law firm.
Funds will be deposited directly into your bank account or a check can be overnighted to your home. All you need to do is provide the funding company with either your banking information or address where you will receive your cash settlement check.
What kind of cases qualify for an early cash settlement?
Most funding companies focus their efforts on automobile accident and personal injury cases. However, many funding companies will consider almost any case which has merit, such as wrongful termination, discrimination, sexual harassment, sexual abuse, and more. Plaintiffs have been awarded a cash settlement for lawsuits of every kind. A good lawsuit funding company will find a way to get you the money you have coming to you.
Okay. So how do I find a reputable lawsuit funding company?
If you’re looking to obtain a cash settlement in advance of your lawsuit, the first thing you’ll want to do is speak to your lawyer, or at the very least, your case manager. He or she will be able to point you in the right direction toward a funding company that specializes in cash settlements for lawsuits, and one that will be able to expedite your approval process. If your lawyer can’t direct you toward a lawsuit funding company, it may be time to take matters into your own hands.
A simple internet search is a good way to get started. You can search for terms like “presettlement lawsuit funding” or “lawsuit funding loans” or “cash settlement for lawsuit.” It will be best to also specify your state, and it couldn’t hurt to plug in a few relevant keywords about your type of case. That will ensure you receive the most relevant search results for lawsuit funding companies that will be a good match.
The most important thing in picking a funding company is to ensure that they are a direct funding source. What this means is that if you call a funding company and they are simply a broker sending your case to another funder, then most of the time you are going to pay more for your cash settlement because of broker fees. Most reputable funding companies want you to get a fair deal; those are the ones you want to work with. It will be important to ask the right questions to make sure the funding company you’re planning to work with will be a good fit.
Is there a limit to how much money I can receive?
Normally funding is limited to 15% to 20% of the total value of your estimated settlement. As your lawsuit progresses and more facts come out about the strength of your case, you can always apply for more funding. Some plaintiffs have funded numerous times as their cases drag through the courts.
There are also funding companies that will consider working with you, even if your first funding company will not. In some cases, if your existing cash settlement contract is very expensive, it is possible to refinance at a lower cost to save money. This is similar to a refinance on a home mortgage.
Will the funding company base their approval on my employment history or credit scores?
No credit checks are performed in order for you to get approved for a cash settlement, and no immediate payments will be expected so you don’t have to worry about having a job.
The only thing needed to get approved for a cash settlement loan is an evaluation of the merits of your case. Merit is determined using three factors: Liability (someone did something wrong), damages (harm has been caused), and insurance (there is money to compensate the injured party).
If the merits of your case are strong, then you will not be denied a cash settlement unless you are in active bankruptcy or owe child support liens.
Would I be giving up my rights in regards to my lawsuit?
Many people think that once they take a cash settlement in advance of a lawsuit ruling that they are selling their lawsuit to the funding company. That is not the case at all. The funding company only wants to invest in a portion of your recovery, charge you usage fees or “interest” as if it were a loan, make a return, and move on. They don’t want to own your case or buy it from you.
Plaintiffs are often pressured into settling lawsuits at much lower sums than what they would actually receive by going through with a trial, but the right funding company can keep this from happening by obtaining fair compensation for the plaintiff.
Maybe I should speak to my lawyer first.
Even if you’re just at the consideration phase of working with a lawsuit settlement funding company, you’ll want to consult with your legal counsel before proceeding with anything regarding your case. In fact, it is not only highly recommended but required that you speak to your lawyer or case manager beforehand. They will be able to help you with the decision to take advantage of a cash settlement if you ask their advice, but they may also discourage you as well. Most lawyers or law firms can’t appreciate the dire situation you may be in, and how accepting even a small cash settlement to pay bills may be a huge relief. Ultimately, the choice is yours. In any case, applying for a cash settlement loan will require at least a modicum of assistance from your lawyer.
Why is that?
Because the first thing a funding company will do after receiving your application will be to contact your attorney to request any legal documents that can assist them in evaluating your case. Most funding companies won’t ask your lawyer to fill out a lengthy application on your behalf; they simply need to request a few key documents to help assess the merits of your claim.
The cash settlement offer will be based on the expected value of your case and the risk associated with it. Not every case will be approved; only cases that have a clear fault on the defendant and clear injuries to the plaintiff will be approved. Defendants must also have good insurance to ensure someone will pay for the damage they caused to the plaintiff.
Once the lawsuit funding company determines there is merit to your case, you will very likely be approved and a cash settlement advance can be obtained within 48 hours.
One last bit of advice:
You should only take an amount of money that you absolutely need to get by. In the end, a cash settlement loan is expensive and will cut into your ultimate settlement. Contrary to what people think, lawsuit funding companies do not want to see this happen. If they are reputable, they will advise you to only take what you need.
In addition, a legitimate cash settlement contract will offer a previously determined payback amount. No interest or surprise fees. Some companies may seem affordable in the beginning, but with escalating compound interest, you may soon find that you owe the lenders so much that it cancels out your lawsuit settlement. You’ll want to make sure you’re dealing with a reputable lawsuit funding firm so that you don’t get hit with unexpected charges.
I think I still have questions about this whole thing.
You probably have a list of concerns that you’d like to address before proceeding. Maybe you’re not even sure what you need to know. In any case, your funding company should be able to inform you about any details regarding your cash settlement contract. You want to be sure you fully understand the terms of the agreement before going ahead and signing anything.
If you decide to proceed, do some research first. Find out which funding company will best suit your needs. Then give them a phone call and ask some questions. If all goes well, the funding company will ask you to fill out their application. They will then contact your lawyer, receive the relevant documents regarding your case, and review your lawsuit. If the funding company feels that your lawsuit has merit, they’ll approve your application, draw up the contracts, and get you the money you have coming to you. It really is as simple as that.
Legal-Bay has been in this business for a long time. We’ll be happy to speak with you and answer any lingering questions you may have regarding your cash settlement. Please feel free to contact us for more information.