After an accident, the responsible party and their insurance company may draw out settlement negotiations in the hope that you settle for a lower amount. However, with pre-settlement funding, you can comfortably pursue your case to achieve the maximum compensation.
When you obtain a pre-settlement legal cash advance, you can pay for current expenses, including groceries, bills, medical costs, and your rent or mortgage. It also allows your attorney time to negotiate a better deal or take your case to trial if necessary.
How Does Pre-Settlement Legal Funding Work?
What if you could get the money from your settlement now instead of several weeks, months, or years down the road? That’s the idea behind pre-settlement funding.
Pre-settlement funding companies offer money that you won’t have to pay back until after you receive your settlement. This isn’t a loan, but instead is risk-free money you can receive right now based on the estimated size of your future settlement.
Victims generally pay nothing to the funding company until they receive their settlement, at which time they’ll repay the amount they received along with a processing fee. In exchange, the company assumes all the risk of the case. This means that in the event that a victim isn’t awarded a settlement, they owe the company nothing.
Pre-Settlement Funding Pros and Cons
It’s important to know about the pros and cons of a settlement loan before deciding whether or not it’s right for you. Ask yourself the following questions before applying for it:
- What is my case potentially worth?
- How much money do I actually need to cover my expenses?
- How much in fees, interest, and other expenses will I have to repay?
- Are alternative sources of funding available?
- Will pre-settlement legal funding help me pursue my settlement?
What’s The Difference Between Pre-Settlement Funding And a Lawsuit Loan?
Pre-settlement is different from a lawsuit loan because the money you get from the funding isn’t borrowed. There are no monthly payments and you do not owe a pre-settlement funding company anything if you lose your case.
As reported by the Center for Public Integrity, lawsuit loans often leave injured people with repayment plans that end up being worth two or three times what they initially borrowed.
Even worse, sometimes lawsuit loans require injured people to sign up for monthly payments, regardless of whether they win their case. This often leaves the borrower worse off than before they took out the loan.
Non-Recourse Debt and Legal Funding
Pre-settlement legal funding differs from a lawsuit loan in another crucial way. The former is a type of non-recourse debt, which limits the extent to which you are personally liable for it. A lawsuit loan, on the other hand, is classified as recourse debt, meaning you will repay it – one way or another.
The Internal Revenue Service classifies all debt as either recourse or non-recourse. With a recourse loan, the lender can hold the borrower personally liable for the entire debt owed. On the other hand, a non-recourse loan sets clear limits on what the lender can recover from the borrower.
In short, this means that with pre-settlement funding, you are protected from personal liability. For example, if you end up losing your lawsuit and fail to get compensation, you will not owe your funding company anything.
How Much Does Pre-Settlement Funding Cost?
A reputable pre-settlement legal funding company will only charge you a small percentage of your final settlement, typically around 1-3% of the amount you’re awarded. A good company also won’t charge you anything out-of-pocket to get your funding.
Due to a lack of regulation of the pre-settlement funding industry, some companies charge their clients exorbitant fees. Pre-settlement funding companies that try to take advantage of their clients might take up to 50% of a victim’s settlement award as a fee for the funding.
Always be sure to carefully read the contract before applying for pre-settlement financing to know if the terms are right for you.
What if You Still Need More Funds?
If your case takes longer than expected to settle, your pre-settlement funding may run out, leaving you unable to cover basic expenses. You can always apply for additional funds if you need more before your case resolves. The process to get multiple pre-settlement loans is as simple as the first.
Get Your Pre-Settlement Funding With High Rise Financial
If you’re considering pre-settlement financing, apply for free today at High Rise Financial. Many of our past clients received pre-settlement legal funds in their accounts in as little as 24 hours after applying.
Applying for pre-settlement financing from us is safe and free. Fill out the form on our contact page to get started. Feel free to call us if you have any questions and we’ll be happy to guide you through the process!