Are you in the middle of a lawsuit?
If so, you may be waiting a long time for the case to settle — and to get the money you are owed.
When you’re dealing with a physical injury, or trauma due to an accident, then it’s not always possible to hold out until your case is settled.
This is where pre-settlement loans come into play.
Rather than waiting months — or years for your settlement money, you have the option of taking advantage of pre-settlement funding to pay the bills and stay afloat. With this type of funding, you can gain access to the money you are owed before the case is settled.
The question you are probably asking is “will a pre-settlement loan work for me?”
Discover what a pre-settlement loan is, how it works, and what to keep in mind as you are considering the best direction for your situation in this article.
Pre-Settlement Loan [Definition]
While it’s often referred to as a ‘pre-settlement loan,’ this is not a traditional loan.
Rather than borrowing money from a lender, you are actually receiving funding from an investor. This is known as pre-settlement funding or a lawsuit advance.
When you opt to receive pre-settlement funding, a company is essentially investing in a portion of your future settlement — giving you access to the money you would receive from the settlement ahead of time.
Once your case is settled, the company that provided the funding would receive a percentage of your settlement money.
This money can be spent however you like, however, most people use the funding to pay for expenses related to their case such as medical bills, lost wages, and additional damages. This money is often available in as little as 24 hours after your case has been reviewed.
The payment due to the investor for the pre-settlement loan isn’t due until your case has been settled and you receive your settlement money. Once the claim has been settled, the percentage that has been claimed by the company will be paid back with predetermined interest.
How Does a Pre-Settlement Loan Work?
While most types of lending come through a bank or lender, this type of funding is provided by a pre-settlement advance company.
You are welcome to apply for a pre-settlement loan anytime before your case settles.
You will be required to provide your lawyer’s contact information when applying for a pre-settlement loan so that your case can be evaluated.
It’s important to research the company that you decide to work with before deciding to accept funding for your case. Once you’ve found a reputable company, you can submit your application and they will contact you for additional details. The company will also contact your attorney to
determine the eligibility of your case and the amount of money that you are likely to receive through your settlement.
Your lawyer will work with your settlement advance company to negotiate the amount of your settlement that will be purchased by the company. This will also include the set amount of fees and interest that will be paid out once your case settles.
Once all of these details have been worked out, you will receive a contract that both you and your lawyer will need to sign before you are eligible to receive the agreed-upon funding.
After your case is settled, the funding company will receive the percentage that they purchased along with the interest and feeds that were determined during the negotiation.
Is My Claim Eligible for a Pre-Settlement Loan?
If you are currently involved in a civil case then you may be eligible for pre-settlement funding.
There are many types of cases that you can apply for funding for. The most common types of cases that fall under this category involve personal injury lawsuits. A few civil cases that are eligible for pre-settlement loans include:
● Personal Injury
● Car Accidents
● Negligence
● Product Liability
● Wrongful Death
● Medical Malpractice
● Animal Bites
● And more
The lawsuits listed above are just a few of the case types that might be eligible for pre-settlement funding. Applying to a pre-settlement funding company is the best way to determine if you can get your money ahead of time.
How Many Pre-Settlement Loans Can I Apply For?
It is possible to receive more than one pre-settlement loan.
If you’re interested in receiving two pre-settlement loans for the same case then you may be able to acquire additional funding from a second settlement advance company. You will need to apply to both companies separately and they will evaluate whether your case warrants
additional funding.
Keep in mind that it’s important to make sure that both companies are aware of the negotiations taking place and that your lawyer is involved in the entire process.
Why Should I Apply for a Pre-Settlement Loan?
If you are considering applying for a pre-settlement loan, it’s a good idea to consider what the benefits will be. Here are a few reasons that you might want to acquire funding for your case before it settles:
● Cover Necessary Expenses: If you are involved in a civil case then you probably have a number of bills that need to be paid. Expenses can pile up quickly and waiting for your settlement money to come through can take longer than you might expect. Some of these expenses can include medical bills, lost wages, transportation, therapy, and short and long-term disability costs. A pre-settlement loan can offer a quick buffer to help you deal with your current circumstances until your case is resolved.
● Trial Costs: If you have to take your case to court then your costs will increase quickly. Paying for court costs can be difficult without the money required to keep things moving in the right direction.
● Time to Negotiate Your Settlement: When you don’t have the money to pay for your bills it can be tempting to settle for a lower amount to get access to cash more quickly. With a pre-settlement loan, you will be buying yourself additional time to get the best deal for your specific case.
● Low Risk: Unlike a traditional loan, the money that you pay back for your pre-settlement funding comes directly from your lawsuit settlement payout.
What Happens if I Don’t Win My Case?
When you apply for a pre-settlement loan, your case will be evaluated by the investment company to determine whether it has a good chance of winning.
However, if you do lose your case, then you owe nothing to the settlement advance company.
Since the company invested in your case by purchasing a portion of your future winnings, then there is no payment made if the case does not go in your favor. If you win your case then the settlement advance company will be paid out with the amount that was agreed upon when you decided to take the funding.
Final Takeaways
Understanding the answer to the question “what is a pre-settlement loan?” means that you are now ready to search for an option that works for you.
Before you decide on a settlement advance company, makes sure to research the company’s background and reviews so that you can choose an option that makes sense for you. Waiting for your case to settle can be a stressful time but with faster access to cash, you can experience some relief while you wait for the best payout from your settlement.