If you’re filing a personal injury lawsuit, chances are you’ve come across numerous guides explaining the process and steps to ensure fair compensation. But what about the expenses? How are you supposed to handle daily expenses and legal costs as you recover from a physically and emotionally challenging situation? This is where pre-settlement funding comes in.
This guide explains everything you need to know about pre-settlement funds or loans, so you can make informed decisions.
What is Pre-Settlement Funding?
Pre-settlement funding, also known as a lawsuit loan, is a cash advance to the plaintiff to cover ongoing expenses related to a legal claim. You can use the money to cover:
- Medical bills
- Mortgage or rent
- Insurance payments
- Utility bills
- Vehicle maintenance
- Child support
- Other expenses
Don’t get confused by the term “loan” in lawsuit loans. Pre-settlement funding is not a loan in the traditional sense. You only pay the money back if you win the case. Reputable funding companies like USClaims assess the details of your case and your jurisdiction to determine the advance amount.
Who is Eligible?
The most obvious criterion for a pre-settlement loan is that you should have an active personal injury lawsuit in progress. Moreover, you should be 18+ and have an attorney representing you.
You should also have an eligible case type. The following types of personal injury cases are usually eligible for lawsuit loans:
- Car accidents
- Construction site accidents
- Dog bites
- Slip and fall injuries
- Medical malpractice cases
- Product liability
- Nursing home abuse
- Truck accidents
- Catastrophic accidents
- Defective medical products or devices
Reasons to Get Pre-Settlement Funding
Applying for a pre-settlement loan isn’t mandatory. But it is a good idea for several reasons, such as:
Cover essential expenses
A personal injury lawsuit can take months, even years, to resolve. Managing day-to-day expenses during such situations can be challenging. With a pre-settlement loan, you can cover utility bills, mortgage, and other expenses. This is especially important if your injury has led to a loss of a job or a reduction in wages.
Pay for medical bills
Medical bills can quickly pile up when you’re recovering from a personal injury. Use pre-settlement funds to cover any ongoing or future medical bills, including medication, surgeries, physical therapy, or diagnostic tests.
Avoid accepting a low settlement offer
Litigation is stressful and expensive. When you’re paying bills left and right, taking the first settlement offer can feel like a practical solution. In most cases, this amount would only cover initial medical bills and nothing beyond. Pre-settlement funding will give you and your attorney more time to negotiate for fair and just compensation.
No risk if you lose
As hinted earlier, you only pay back the pre-settlement funding if you win the case. If you lose, you owe nothing to the funding company.
No credit check required
Pre-settlement funding companies don’t check your credit score or verify your income. This makes them a viable option for those who might not qualify for a traditional bank loan.
Getting injured due to someone else’s negligence is financially and emotionally exhausting. But pre-settlement funding companies can help ease some of your struggles.
How the Pre-Settlement Funding Process Works
The application process for pre-settlement funding is usually straightforward and much faster than traditional loans. After you apply, the funding company reviews the details of your case by working directly with your attorney. They assess factors like liability, potential settlement value, and how far along the case is.
Once approved, you can often receive funds within a few days. There’s no obligation to accept the offer, and you can choose how much of the approved amount you actually need. This flexibility helps plaintiffs avoid borrowing more than necessary.
Costs, Fees, and Things to Watch Out For
While pre-settlement funding can be helpful, it’s important to understand the costs involved. Funding companies charge fees that accumulate over time, meaning the amount you repay can increase the longer your case takes to settle.
Always review the agreement carefully and ask questions about interest rates, compounding terms, and repayment caps. Working with transparent and reputable providers can help you avoid unexpected surprises when your case concludes.
Is Pre-Settlement Funding the Right Choice for You?
Pre-settlement funding isn’t a one-size-fits-all solution. It works best for plaintiffs who truly need financial support and have a strong case with a reasonable chance of success. If you’re able to manage expenses through savings or other assistance, borrowing may not be necessary.
Before applying, discuss your options with your attorney or find an experienced one in your area who is an expert in pre-settlement funding. They can help you weigh the benefits against the potential costs and decide whether pre-settlement funding aligns with your financial and legal situation. You can then make the right choice based on your needs.