Lawsuits can take months or years to settle, but pre-settlement legal funding can give you access to the money from your award now. This is critical for many plaintiffs, as they suffered a loss of income due to their lawsuit and need money to pay their bills. But which cases actually qualify for pre-settlement legal funding?
The answer is that most lawsuits that invoke a pending settlement qualify for legal funding. However, there are a few qualifications you’ll need to meet first before you can obtain a lawsuit loan. Knowing what those are can help you decide if this legal funding is the best option for your situation.
What is Pre-Settlement Legal Funding?
Pre-settlement legal funding is a form of financial assistance that is closer to a cash advance than a loan. Used during the negotiation process of a lawsuit, this type of funding is non-recourse. Any repayment of the legal funding will come only from the settlement award itself, and if there is no award, then the plaintiff owes nothing.
Some of the most common types of lawsuits that attract pre-settlement legal funding are the following:
- Car accident cases
- Slip and fall claims
- Employment law disputes
- Whistleblower cases
- Jones Act cases
- Product liability injuries
- Medical malpractice
The negotiation phase of a lawsuit can drag on for months, with some cases failing to resolve for years. Meanwhile, the injured person can suffer from lost wages and medical bills coming due even as everyday expenses like rent or mortgage payments pile up.
In many situations, the opposing side knows that they can benefit from extending the negotiations for as long as possible, making the injured person desperate. With pre-settlement legal funding, you can resist these pressure tactics with the money you need to pay your bills while waiting for a favorable outcome in your case.
How Does Pre-Settlement Legal Funding Work?
In order to obtain pre-settlement legal funding, you’ll need to first apply with the funding company you wish to borrow from. They’ll carefully review your application and the details of your case to see if you qualify. Once you’re approved, they’ll speak with your lawyer about disbursement of funds.
Here’s what you can expect from each step of the process to obtain legal funding:
The Application Process
When you apply for pre-settlement legal funding, the good news is that the process is not dependent on your personal finances because there are no:
- Credit checks
- Bank statement checks
- Financial history checks
Instead, legal funding companies make their decision to find your case based on the details of your claim. Since these companies are repaid out of your eventual settlement, they look carefully into the expected settlement you will receive before approving your funds.
Factors such as your responsibility for damages in the case, the length of the expected negotiation process, and the amount of your damages can influence your payout.
The Repayment Process
Lawsuit loan companies work directly with your attorney or law firm when it comes time for repayment. Once they get a check for the settlement or jury award that you are owed, they write a new check for the agreed-upon amount to the legal funding company. Since this process is streamlined through your attorney, there are no:
- Monthly payments
- Risk of default
Because pre-settlement legal funding is non-recourse, the most a legal funding company can take as repayment is part (or all) of your eventual settlement. They can’t pursue repayment from your personal finances, and you don’t have to worry about predatory practices like wage garnishment. Plus, if you lose your case, you don’t have to repay anything.
How Much Does Legal Funding Cost?
The cost for legal funding can differ widely depending on which lender you work with. Since the industries are unregulated, it’s possible for some companies to charge substantial interest rates that can take up an entire settlement. However, reputable legal funding companies won’t do this and will charge low interest rates for their clients.
Additionally, predatory lending companies will use compounding interest rates. This increases the amount that plaintiffs must repay by the end of their case. Again, reputable legal funding companies avoid these practices and charge simple interest, leaving you with more of your settlement by the time your case is over.
Common Uses for Pre-Settlement Legal Funding
The money you receive from your pre-settlement legal funding is yours to do with as you see fit. Some of the most common uses for pre-settlement legal funding include:
- Purchasing necessary medical equipment for your home
- Providing food and clothing for your family
- Replacing lost income resulting from your injury
- Paying off medical bills
- Paying your rent or mortgage
While pre-settlement legal funding is usually considered part of your settlement and (in most cases) is not taxable, you will need to pay taxes on it if you use it for certain purposes, such as making an investment.
How to Choose a Legal Funding Company
The legal funding industry is largely unregulated, which means that you’ll need to take special care when searching for a company to work with. Consider the following factors before deciding on a company to work with:
- Find out if they serve your state: Some legal funding companies avoid certain states, especially those with at-fault insurance.
- Read online reviews: Reputable legal funding companies will have many online reviews from past customers you can read.
- Learn about their interest rates: A good legal funding company will charge low interest at simple rates, while a company you would want to avoid will charge a higher interest with compounding interest.
Your settlement may need to last the rest of your life, so it’s vital to take the time necessary to find a legal funding company you can trust. Compare offers between companies and don’t be afraid to ask questions. The best legal funding companies have live staff members on-hand to answer any questions you may have about what they offer.
Learn Whether Your Case Qualifies for Pre-Settlement Legal Funding
If you are in the midst of a lawsuit and are represented by an attorney or law firm, you might qualify for pre-settlement legal funding from Tribeca Lawsuit Loans. We’re awarded over $45 million to over 1,630 plaintiffs and can give you the funding you need to fight for justice. Visit our website today to apply for legal funding today.
Don’t let the opposing side in your lawsuit pressure you into settling for a small amount. You deserve the full compensation to which you are entitled. If you are ready to apply for your cash now, simply fill out your information on our Apply Now page and we will be in touch. Our application takes just minutes to complete and you could receive $1 million within 24 hours.