While this is generally good news for plaintiffs in personal injury cases, settlements can still take months or years to negotiate. If you find yourself struggling to make ends meet while waiting for your case to settle, consider taking out a pre-settlement loan.
Keep reading for more information on pre-settlement funding companies and how to choose a company that is right for you.
What Is Pre-Settlement Funding?
When you file a lawsuit in a personal injury claim, you become eligible for a special type of loan.
A pre-settlement loan is a non-resource loan that allows you to borrow money while you are waiting for your claim to settle.
Personal injury lawsuits can take months or years to resolve. Your claim may settle out of court or you may be awarded a settlement by a jury or judge. While you are waiting for the money you are owed, you will likely face some unexpected financial hardships.
As if being the victim of an accident is not bad enough, you will likely owe large hospital and medical bills. Your injuries may require time off work if you can hold down a job at all.
Pre-settlement funding allows you to borrow money from your anticipated settlement. With this type of loan, you will not have to make any payments until you receive a settlement check.
If you do not receive a settlement check or do not win your case you will not have to pay back the loan.
Qualifying for Pre-Settlement Funding
There are only two qualifications to apply for this type of loan.
First, you must have a pending lawsuit. Second, you must be represented by an attorney. If you meet these two conditions, you are eligible to apply for a loan.
How much you are able to borrow depends on the value of your case and your anticipated settlement.
Once you apply for the loan, funding is usually approved quickly. You’ll receive funds in 24hrs.after signing the paperwork..
Since the loan is against the settlement you may receive, you will not be subject to traditional lending qualifications. Your lender will not require proof of employment, as it is not relevant. Your lender will not check your credit and you will not put up any assets as collateral.
Choosing Pre-Settlement Funding Companies
If you think you might qualify for a pre-settlement loan, there is no risk in applying. However, you want to make sure you choose a trusted company that will give you a good rate.
Remember that you will not make any payments until you receive your settlement check.
Keep reading for more tips on how to choose the best lender for you.
1. Be Informed About the Process
It’s important that you understand the process and know what questions to ask your lender. While we have explained that most settlement loans are non-recourse loans and you will not have to pay them back if you don’t win your case, read the terms and conditions of any contract you sign.
No matter what company you go with, you will probably owe some additional fees. After all, you are borrowing money from a business.
You want to look for a company that offers low lawsuit funding rates. You don’t want to get into a situation where you owe your entire settlement plus substantial interest.
Your goal is to find a company that will lend you the money and still allow you to receive significant funds at the time of settlement.
2. Talk to Your Attorney
As mentioned previously, you must be represented by an attorney to apply for a lawsuit loan. You should keep your attorney in the loop throughout this process.
He or she will be the most informed person when it comes to determining the value of your case and helping you decide on an amount to borrow.
Since you will be signing a contract, make sure your attorney reviews it before you sign. Your attorney may even be able to recommend a pre-settlement loan company that he or she has worked with before.
3. Talk with Friends and Family
Word of mouth is one of the best referral services and an easy way to vet a company.
Asking your friends and family whether they have any experience with lawsuit settlement loans will give you a first-hand look at potential companies from your most trusted sources.
When it comes to reviews, there are none better than those from your inner circle. Once you get the name of a company from a friend or family member, you can look it up and do further research.
4. Online Reviews
Reading online reviews before doing business with a company is essential in this day and age.
It’s understandable that some reviews may be outliers, but you will be able to get a general feel for the company and the way it does business.
Be wary of companies with all 5-star reviews or all negative reviews. Keep your eye out for red flags. If something seems shady or off, it probably is.
The internet will help you compare a couple of companies. Be sure to explore all of your options.
5. Ask Questions
After doing research about lawsuit funding and contacting a company, you and your attorney should ask the company the tough questions.
Make a list of questions that come up as you research and provide them in writing to the company. A good company you can trust will be transparent and answer your questions honestly and in good faith.
Make sure your to keep your attorney involved in this part of the process, as his or her expertise and presence will go a long way.
Now that you have an idea of how pre-settlement funding companies work, the next step is to apply for a loan. The initial application is easy and is the first step in working with a specific company.
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