Taxes are complex, and so are lawsuits. Combine the two, and the average person stands little chance of catching every nuance and understanding every intricate twist in the laws. Pre-settlement legal funding, however, is usually tax-free.
You don’t have to pay taxes on that funding. This is because pre-settlement legal funding is considered an advance on your lawsuit settlement or jury award, not a form of wages or income. There are some exceptions to this generality, however, so it is worth going over the details.
Taxes and Settlements
First, let’s talk about your personal injury lawsuit settlement. Personal injury cases, according to the American Bar Association, are about injuries and damages to you and your property that result from the actions, negligence, or liability of someone else. They can include cases like:
- Auto accident claims
- Medical malpractice
- Nursing home negligence
- Dangerous or defective products
- Dog bites and attacks
- Slip and fall incidents
When you get your settlement, any amount that pertains to your physical damages (like your injuries and property damage) is not taxable. Sometimes, though, you may have to face taxes on non-physical damage compensation (such as money designed to compensate you for emotional pains). In general, the pre-settlement legal funding you get from High Rise Financial is considered to be an advance on your physical damages, so it should not be taxable.
Investing With Your Pre-Settlement Funds
In some cases, though, you might have to pay taxes on money that originated as part of your pre-settlement legal funding. If you use some or all of those funds to make a financial investment, for instance, that investment is taxable just like any other investment.
Non-Taxed Expenses With Pre-Settlement Funds
Usually, personal injury claimants do not seek pre-settlement funding as a way of funding an investment. Instead, you might apply for cash now so that you can meet expenses like:
- Your new medical bills
- Additional medical equipment you need in your home due to your injury
- Repairing your damaged property, such as a car
- Groceries for you and your family
- Gas money
- Monthly rent payments or mortgages
If you use your pre-settlement legal funding in this way, it is not taxed as income. The best move, if you are nervous about pre-settlement legal funding and the laws surrounding taxation in your state, is to speak with your attorney about the matter.
How to Get Your Pre-Settlement Legal Funding
Does the idea of non-taxable money in your bank account in as little as 24 hours sound good to you? Do you need to get some extra cash to make ends meet while you wait for the at-fault party to finally agree to the compensation package you deserve? Pre-settlement legal funding is the answer. Unlike lawsuit loans and cash advances that have been decried by the Center for Public Integrity (among other institutions), pre-settlement legal funding doesn’t prey on your personal finances.
As a form of non-recourse debt, pre-settlement legal funding from High Rise Financial is designed to be no-risk for you. For example, you do not have to pay us back if you lose your case. Here’s a list of other ways pre-settlement legal funding is better than these other options.
- NO credit check
- NO employment verification
- NO bank statements or tax records required
- NO monthly payments
- NO compound interest
Not only is pre-settlement legal funding non-taxable, but it also does not show up on your credit report. Therefore, it won’t affect your credit score!
Applying Through High Rise Financial
When you apply for pre-settlement legal funding from High Rise Financial, we will need information on the facts surrounding your case. For example, you should include a description of what happened, the type of lawsuit you have, the extent of your injuries, and contact information for both you and your attorney.
Importantly, High Rise Financial requires you to have a lawyer or law firm on your case before we can approve any pre-settlement legal funding. Not only does this give you a better chance at an appropriate compensation package rather than a lowball offer, but we also work directly with your attorney at the end of your case. Once your lawyer gets the check from the at-fault party, they will send us the agreed-upon repayment amount so that you don’t have to worry about monthly payments, compound interest, or remembering to send the payment yourself.
Get the Money You Need Now
If you are a claimant in a personal injury lawsuit and need cash while your case resolves, fill out the form on our Apply Now page today. When the facts of the case warrant it, our underwriters are able to provide up to $250,000 in as little as 24 hours. With that cash in hand, you will be able to de-fang the stall tactics of the other party and give your attorney time to negotiate a compensation package that truly meets your needs.
For any questions, additional information, or concerns about the pre-settlement legal funding process, get in touch with our team today. You can speak with a representative by calling (877) 823-4377, or you can email us through our contact page and we will respond as soon as possible.