Lawsuits are stressful, time-consuming, and expensive.
Your day in court may take months or even years to arrive. Yet this doesn’t guarantee that the end is in sight. There are many twists and turns as the legal process unfolds. Read on to see how pre settlement funding can help.
On top of this, stress is magnified if your lawsuit is a result of some personal injury, medical malpractice, or other debilitating event. You may be struggling to pay bills, such as medical bills, rent, or utilities.
Some people may be lucky enough to have friends or relatives to help you in your time of need, but even this can have a limit, and you may not feel comfortable borrowing money from loved ones.
So, what is someone supposed to do in this situation? You’ve heard of a pre-settlement loan, but what is it? Can it help you in this challenging time, or will it add to more stress in the end?
Perhaps you’ve taken out a pre-settlement funding loan but need more cash, so are wondering if you can have a second one? Continue reading to find out the answer to these questions.
What’s a Pre-Settlement Funding Loan?
So before deciding whether pre-settlement funding is suitable for you, what it is? A pre-settlement funding loan is a comparatively new type of financing that can be obtained by plaintiffs for a variety of lawsuits.
However, a pre-settlement funding loan isn’t really a loan but is actually a cash advance based on the expected verdict or settlement of your pending legal case.
The funding can also be known as a “lawsuit advance,” “lawsuit funding,” or a “pre-settlement advance.”
As stated, pre-settlement loans aren’t really loans as we know them in the traditional sense. This is because you only need to pay back what you borrowed if you win your case. If you lose your case, you’re not required to pay back the money.
This is important, so let me reiterate the point- After you file a lawsuit, and realize you’re in financial difficulties, you can approach a lawsuit funding company and ask them for a pre-settlement funding loan.
They’ll then contact your attorney to determine the strength of your case. If the case seems solid, the company advances you money based on an estimation of your legal claims.
If you win the case, you pay back the money from the settlement; if you lose, you pay nothing back.
What Types of Lawsuits is This for?
So far, this sounds pretty good, but perhaps you’re wondering whether your lawsuit is eligible for this loan?
The financing is available for a wide variety of lawsuits. These include:
- Personal injury
- Motor vehicle accidents
- Defective drugs
- Wrongful death
- Workplace injuries
- Medical malpractice
- Product liability
- Commercial and employment lawsuits
Each financing company may vary on the lawsuits they fund, so be sure to communicate with them and your attorney properly before deciding anything.
What’s the Process for Getting Pre-Settlement Funding?
Should you decide to go for pre-settlement funding, the process should be as simple as:
- Finding a pre-settlement funding company to work with.
- The chosen funding company will then correspond with your attorney to review your lawsuit.
- With your attorney, you sign the agreement
- The company typically offers a choice as to how you will receive the funds. The money could be ovennighted wired or even come in the form of a debit card. The time of getting funding varies, but some companies offer financing to be delivered within 24 hours without any additional fees. Talk this through with your attorney and chosen company.
Need More Cash?
You may find that the payment doesn’t entirely cover what you need. What do you do then?
This depends on the details of your legal case. You may be able to get more than one advance, but in general, you can only sell a maximum of between 15-20%.
What do I mean by sell? If you win your case, the money that you borrowed will be paid out of your settlement. Companies offer the funding based on an estimation of your final settlement after any legal or attorney fees are paid.
How Many Pre Settlement Funding Loans Can I Get?
Technically, there isn’t a set limit on how many loans you can get. So, in theory, the company may allow you to get a second pre-settlement loan. However, this will need to be determined by your funding company and your legal team.
Generally, the funding estimated is the maximum amount you can borrow, because when you first take out the loan, your legal team and company will assess how much money you get from your settlement and how much you will need to see you through that time.
The loan is typically restricted to 15-20 percent of the estimated value of your legal case. This is because it’s only supposed to be a modest loan that will keep you afloat during the process.
Of course, many expenses are unforeseen, especially if you’re unable to work or need ongoing medical care. In this case, you may need to re-apply for a new cash advance on your settlement.
However, the total payout (this means both loans if you take out two) must stay under 20% of the lawsuit valuation. This is to protect you and the lending company, as these loans are usually considered “non-recourse” loans.
It also means that if you get your settlement, you won’t find that the majority has been lost trying to pay off this settlement.
Pre-settlement funding loans can be beneficial during a fierce legal battle. The last thing you need during this already stressful time is to have to fret about bills, so this funding could be precisely what is required to stay afloat.
Does That Clarify Things for You?
We hope that having read this article we’ve answered some of your questions about pre-settlement funding. If you want to learn more about this topic, please feel free to reach out and contact us and we’ll do our best to help!
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