If you are the plaintiff in an active lawsuit, chances are good that you’re looking to receive monetary compensation. But because the legal process can take much longer than you may have anticipated, you now find yourself in unexpected financial straits. This is where settlement funding comes in.
If you’ve found yourself here, you may have been searching for a “settlement loan” or a “lawsuit loan” when in actuality, pre-settlement lawsuit funding is what you’re looking for. Pre-settlement funding can offer you the best way to receive monetary compensation in advance of a final ruling on your case. If you’d like a more detailed explanation of pre settlement lawsuit funding, you can check out our article on the subject here , or Nolo’s helpful articles here and here.
Now that you’re all caught up on what pre settlement lawsuit funding is, we’re going to lay out some pros and cons to see if a lawsuit cash advance is the right choice for you.
Table of Contents
Settlement Funding PROS
Ease Financial Strain:
The number one reason that people take funding from their pending lawsuit is to pay their bills. One advantage of pre-settlement funding is to allow you to manage your legal fees and personal bills while you wait it out through the endless red tape of the court process. Even if you are anticipating a favorable judgement, it could take many, many months before your case is settled, all the while leaving your finances in limbo.
Pre-settlement funding can get you the money you have coming to you without all the unnecessary wait time. Here are just a few of the financial situations that could be remedied by taking a well-deserved cash advance from your lawsuit:
- Legal fees
- Mortgage or rent
- Home improvement
- Medical bills
- Credit cards, utilities, car payments
- College tuition
- Business expenses
- Vacation
If you’d like to ease the stress caused by these or any other outstanding bills, pre settlement lawsuit funding may be the right choice for you.
Enables You To Hold Out For A Bigger Settlement:
Insurance companies want to pay you off with the lowest amount possible in the quickest amount of time. Accepting their lowball offer might be tempting, even though you know you’d be entitled to a much larger amount if you waited for your trial to conclude. Taking pre-settlement funding now will help you hold out until your case is settled. A bigger payout will also help to offset any loan fees you may incur from your lawsuit funding company. Simply put, a risk-free lawsuit settlement loan allows you to hold out for more money.
Viable Source Of Income If You Are Unable To Work:
If you were the victim of an injury due to a motor vehicle accident or medical malpractice and have been disabled in any way, there’s a good chance you are unable to work due to your injuries.
Insurance companies have been known to tie up litigation for years. In the meantime, your ability to work has drastically lessened or ceased altogether. Without a steady income, how are you supposed to survive until your case settles? Pre-settlement funding can help you to not only keep up with your bills but maintain your lifestyle.
Supplemental Income As You Look For Work:
Maybe you are able to work but you were dismissed from your job because of discrimination of some sort. Whether racial, gender-based, or age-related, you may feel as though you have been unjustifiably dismissed. Because discrimination is unlawful and cruel, you rightfully filed suit against your former company. But regardless of how you wound up here, the fact remains that you no longer have a weekly paycheck to count on. Pre settlement lawsuit funding is a way to get cash now, without having to wait until your case is concluded… or until you find a new job.
Less Expensive Than 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 cash before your case settles, you may be in the process of researching a “bank loan” when “pre settlement lawsuit funding” would benefit you more. Because in actuality, pre-settlement funding isn’t like a bank loan at all, and a much better option for a way to obtain some much-needed cash.
Here’s why: Pre-settlement funding offers a much lower risk than a bank loan because there is no recourse from the funding company if your lawsuit ultimately fails. That means you don’t have to pay back the funds if you lose your case. No monthly payments; no interest fees. The funding companies will assume all the risk with pre-settlement funding. Just try to get a deal like that through your bank! With a bank loan, the borrower has to have collateral and credit, and be prepared to incur fees and interest charges no matter what. Since pre-settlement funding is not a loan, credit approval isn’t needed to qualify. Funding is based entirely on the merits of the case, and nothing else.
No Credit Checks Performed:
No credit checks are performed in order for you to get approved for pre settlement lawsuit funding. And you don’t need a job since there are no recurring payments made once you receive the funds. The only thing needed to get approved is an evaluation of the merits of your case. If your case is strong, then you will not be denied unless you are in active bankruptcy or owe child support liens. The best pre settlement funding companies will be able to get you the lowest cost pre settlement funding to suit your needs.
Deal With Someone Who Understands What You Are Going Through:
Legal-Bay is one of the best pre settlement funding companies in the industry; we have over twenty years’ worth of knowledge to share with you.
If you’d like to know more about how to go about obtaining pre settlement lawsuit funding, we’ve written extensively on the subject here. The most important thing to ensure while choosing a funding company is 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 because of broker fees. The best 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.
Legal-Bay provides some of the lowest cost pre settlement funding rates in the business. We’ve been doing this a long time for clients with varying situations across the United States and we know what our customers need and expect from us.
Peace Of Mind:
Probably the greatest advantage to acquiring pre-settlement funding from a trusted lawsuit funding company, however, is peace of mind. Worrying over the details of your lawsuit can cause seemingly unending stress. Couple that with financial strain, and it’s enough to instill unfathomable fear as well. A pre settlement lawsuit funding loan can help to lift the burden and offer you room to breathe.
CONS
Added Fees:
To put it bluntly, pre settlement lawsuit funding can be expensive. The funder is taking a risk by making an investment in your case. Remember, they don’t get paid back if you lose. So, naturally they need to get a competitive return to make up for any losing cases they invest in. Every funding company is different, but the money is never free.
Some shady pre-settlement funding companies charge an application fee, an origination fee, or some other kind of bogus processing fee which can cost hundreds of dollars, but the best pre settlement funding companies won’t have upfront costs. Your application should be reviewed for free, and any payback fees should be laid out clearly in your contract before you sign. If you don’t like the terms of the contract, you can simply deny the funding and move on.
Costs can range from 1.99% per month to 3.99% per month in compounding interest. Most have rates ranging from 30% to 60% annually, and there are also different types of contracts that charge no more than 200% of the amount funded. A conversation with your lawsuit funder will give you a more comprehensive idea of any costs.
Can’t Receive Full Payout Amount:
If you were looking to cash in the entire amount you are suing for, sorry to burst your bubble, but that’s not what pre settlement lawsuit funding is. While your eligibility for receiving advance funding depends on the expected settlement amount, normally pre-settlement funding is limited to 15% to 20% of the total estimated value.
Can’t Do It Alone:
Even if you’re just at the consideration phase of obtaining pre-settlement funding, 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 if you ask their advice, but they may also discourage you from taking pre-settlement funding on your case.
Your lawyer may not appreciate the difficult, dire financial situation you may be in, and how taking even a small advance to pay bills may be a huge relief. Ultimately the choice is yours. In any case, applying for pre-settlement funding will require at least a modicum of assistance from your lawyer. Thankfully, pre settlement lawsuit funding contracts are very transparent and explain exactly what you can expect, but you will still need your lawyer’s assistance—if not necessarily their approval—before moving forward.
More Paperwork:
There aren’t countless forms for you to fill out, but the first step toward obtaining pre-settlement funding will be for you to complete a preliminary application with the funding company. Generally, the information they are looking for will be your basic contact information, the type of case you’re litigating, and the name and phone number of your attorney. There should be no application fee or credit check.
Once the application has been completed, the funding company will immediately 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.
You May Not Necessarily Be Approved:
Whether you receive an offer or not will depend on the expected value of your case and risk associated with it. Not every case will be approved; only cases that show clear fault on the defendant and clear injuries to the plaintiff will be approved for pre-settlement funding. Defendants must also have good insurance to ensure someone will pay for the damage they caused to the plaintiff.
In Conclusion:
Lawsuit funding provides consumers with financial options. Some may be good or some may be costly, but at the end of the day, the decision to proceed is up to the consumer. Pre-settlement lawsuit funding is a viable service when utilized correctly.
Obtaining pre-settlement funding can be a very expedient process. While the course of action may take longer or shorter periods of time depending upon your specific situation and case, if you’re dealing with a reputable funding company, the time from application to cash-in-hand can be as little as 48 hours, and you only have to pay if you win your case. Traditional loans do not have this capability.
Legal-Bay is one of the best pre-settlement funding companies in the industry. We’d love to speak with you and show you why. Please feel free to visit our FAQ page for more information. Or contact us to learn more about settlement loans and how you can obtain pre-settlement funding.
