If you have been injured by negligence or victimized in some other way, you may have filed a lawsuit to recover compensation. If you are a plaintiff in a pending case, but you need cash now, you should consider applying for pre-settlement funding from a settlement funding company.

Pre-settlement funding is a type of loan that you borrow from a settlement funding company on the basis of the compensation you expect to receive. If for any reason you do not receive the settlement and compensation you expect, you do not have to repay a pre-settlement funding loan.

To learn the details about pre-settlement funding, how it works, and how it may benefit you, keep reading this brief discussion of pre-settlement funding and the difference between pre-settlement funding and conventional loans.

What Is Recourse Debt? What Is Non-Recourse Debt?

The Internal Revenue Service (IRS) makes a substantial distinction between “recourse” debt and “non-recourse” debt. Generally speaking, recourse debts (loans) entail the right of lenders to take legal action to collect what they are owed, including the right to garnish wages.

Pre-settlement legal funding from a settlement funding provider, however, is a non-recourse debt that offers genuine protection to a borrower. When a settlement funding provider is repaid from your compensation, that amount is all you owe, and the loan is considered fully repaid.

If your case is pending for weeks or months and your debts are mounting, pre-settlement funding gives you access now to the compensation you expect to recover. No strings are attached. Use the funds to pay debts, medical bills, legal fees, or any other expenses. It is your money.

What Are the Benefits of Pre-Settlement Funding?

When you are the plaintiff in a lawsuit, the defendant’s attorney and insurance company will know your financial situation and may try to manipulate or intimidate you into accepting a low settlement offer – far less than your lawsuit is worth – because they know you need cash now.

The other side may also seek delays and continuances with the presumption that you will settle for less than your lawsuit is worth before you completely run out of cash. Pre-settlement funding counters and nullifies this tactic.

Especially if your lawsuit is a personal injury claim – or if for any reason, you are unable to work – pre-settlement funding can give you the resources necessary to go the full legal distance and to fight aggressively for the full compensation amount that you are entitled to and deserve.

What Is the Risk?

Other types of loans obligate you to make monthly payments, sometimes for years, with excessively high interest rates. Pre-settlement funding is offered for a flat fee, so you do not need to be concerned about compounding interest.

You will know exactly how much you owe when you receive your pre-settlement funding, so there is no complicated math and no hidden fees involved. Pre-settlement funding is literally risk-free.

What Kinds of Cases May Qualify a Plaintiff for Pre-Settlement Funding?

Every lawsuit and case is unique. When your case is strong and the success of your lawsuit is likely, a funding company is more willing to approve your application and make an offer to you on the basis of what you expect to receive.

Generally speaking, you may be eligible for pre-settlement funding if your case arises from:

  • a traffic accident
  • a civil rights claim
  • a dog bite injury
  • an incident of medical malpractice
  • an injury caused by a dangerous or defective consumer product
  • a sexual harassment or hostile workplace claim
  • a sexual abuse claim
  • a slip-and-fall injury
  • an on-the-job accident

Who Is Eligible for Pre-Settlement Funding?

There is no cost to apply for pre-settlement funding. In order to qualify, you must formally file a lawsuit. Most lawsuits are settled without a trial, but whether your attorney is negotiating or taking your case to trial, you cannot receive pre-settlement funding before you file your lawsuit.

A settlement funding provider works directly with your lawyer to determine if you are eligible for pre-settlement funding. If you are representing yourself and you do not have legal counsel, you will not be eligible.

Before your application for pre-settlement funding can be approved, a settlement funding provider will speak to your lawyer to ensure that your case is a good fit for pre-settlement funding.

When your lawsuit is resolved, your attorney will pay the settlement funding company, subtract any attorney’s fees, and transfer to you the remaining settlement amount. Your pre-settlement funding is repaid at once, so there is no long-term obligation.

Because your pre-settlement funding is repaid from your compensation package, it’s like borrowing from yourself. No credit check will be conducted, and there is no investigation of your personal finances. You don’t even have to be currently employed.

How Should You Choose a Settlement Funding Provider?

Taking legal action to recover compensation may create some personal anxiety. Pre-settlement funding is intended to help you relieve that anxiety – and not add to it. Selecting the right lawyer to handle your case is important, and so is selecting the right pre-settlement funding provider.

Choose a funding provider that spells out the terms and conditions of your pre-settlement funding in a way that’s precise and easy to understand – a funding provider that addresses your concerns and answers your questions regarding every aspect of pre-settlement funding.

Find out how long it will take the funding company to transfer your pre-settlement funding to you. When you have accepted an offer and you’ve signed the accompanying paperwork, a good funding provider can usually transfer your funds to you in less than a day.

Be sure that you completely understand any documents that you sign from a settlement funding provider and that you are completely at ease with the terms and conditions of the funding arrangement.

What Else Should You Know?

A number of considerations will be taken into account when a pre-settlement funding company determines the final amount of your pre-settlement funding.

However, when your case is strong and the success of your lawsuit is likely, a funding provider will be more willing to approve your application and make an offer to you on the basis of what you expect to receive.

You can speak to a pre-settlement funding professional – with no cost or obligation – to learn more. If your lawsuit is taking time and you need cash now, make the call today.