It is not unusual for a parent to contact a lawsuit funding company on behalf of an injured minor child. The parents are typically seeking pre-settlement funding to help cover medical expenses for a child who has been injured in an accident or through medical negligence. Unfortunately, funding is not normally available in this type of situation. Most states consider any contract made by a minor void or unenforceable. This means that most pre-settlement funding companies are reluctant to provide funding to minors, and insurance companies are unlikely to honor funding agreements involving minors.
In rare cases, funding may be available if the parent was injured in the same accident and is a part of the same personal injury claim. In this instance, the parent may be eligible for funding based on their injuries and damages. Even if the parent is able to demonstrate that they suffered substantial damages in their own right, funding companies and insurance companies may still refuse to get involved if a minor is part of the case in any way.
What Is Legal Funding?
Legal funding is a non-recourse transaction in which the funding company provides cash to an injured individual based on their anticipated settlement in a personal injury claim. Since the funds are only repaid if the plaintiff recovers a settlement, it is not considered a cash advance or a loan.
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How Settlements Are Handled in Cases Involving Minors
Courts want to ensure that any settlement is used for the benefit of the child. This is usually done through a structured settlement, such as an annuity or periodic payments into a restricted account. Both the child and the parents have little say in how the payments are structured, and the court dictates how the funds can be spent. This ensures that the income is tax-free and accrues interest at a fixed rate of return. The money is also protected from creditors, judgments, and even unscrupulous family members until the child turns 18.
For more information about legal funding, contact a High Rise Financial funding specialist today or submit your online application to see if you qualify.