What is Pre-Settlement Funding?
When you’re the plaintiff in a lawsuit, such as one involving a personal injury claim, you’re likely hoping to win a judgment or settlement as the result of your case. The downside is that it can take a long time to actually go through all of the legal channels and finalize your case. You may need cash in the meantime to help pay your bills. Instead of applying for a loan to pay your bills, you can apply for a cash advance on your pending lawsuit.
How exactly does pre-settlement funding work?
Once you apply, the settlement funding company will communicate with your attorney about the details of your case. This evaluation gives them a good idea of how much money you can expect to receive either from a trial or a pre-trial settlement. With this information, the company then fronts you with a portion of those proceeds. Once your case is finalized, your advance will be repaid out of the settlement amount, in addition to a funding fee. That means you won’t receive the entire settlement amount, but you do get the advantage of receiving a bulk of the funds upfront.
In most cases, you don’t pay anything to the legal funding company until you receive your settlement. If you don’t receive any settlement at all, you won’t be responsible for repaying any of the cash advance you received. Part of the funding company’s responsibility is evaluating the odds of your case, so they carry the risk if you aren’t awarded anything. So while it may sound like a structured settlement loan or lawsuit loan, it’s really not because there’s no repayment if you’re not awarded the funds to cover the balance.