When the negligence of another party causes painful and disabling injuries, the lawsuit and negotiations to get the compensation you need and deserve take time. Staying home from work to recover from your injuries takes a financial toll as you try to find a way to pay medical bills and living expenses while waiting for a settlement.
Pre-settlement funding provides an immediate solution to your cash-flow challenges. A funding company gives a cash advance against the anticipated settlement of your personal injury case that can be used to relieve some of the financial pressures. There are, however, eligibility requirements to meet in order to receive funding.
What is pre-settlement funding?
A cash advance made by a funding company based on its evaluation of the value of your personal injury lawsuit and the likelihood of a settlement or judgment in your favor goes by many names, including:
Lawsuit cash advance
These and other names describe the same product, which is an offer of a cash payment representing a portion of what a funding company believes your lawsuit settlement or judgment to be worth. The money advanced plus the fees charged by the company are repaid from the proceeds of the judgment or settlement.
Unlike bank loans that are based on your creditworthiness and ability to repay the debt, pre-settlement funding entirely relies on the funding company’s evaluation of the lawsuit. Your income or ability to repay the money advanced is not a factor in determining whether you are eligible for pre-settlement funding.
The advance and fees are repaid from the settlement or judgment from the lawsuit. If you lose the case, the lender absorbs the loss. The typical pre-settlement funding arrangement does not impose on you any personal obligation to repay the money.
How do lenders determine eligibility for pre-settlement funding?
Each company that offers to advance money against the outcome of your lawsuit has the ability to set its own eligibility requirements as a result of limited government regulation of the industry. Some of the most frequently encountered eligibility requirements include the following:
Existence of a lawsuit: You may apply for a cash advance at any stage of the case, but a lawsuit must be pending in court at the time you submit it.
You must have a lawyer handling the lawsuit: Funding companies obtain the information needed to evaluate your case from the lawyer representing you.
Type of case: Personal injury cases and other types of lawsuits likely to end in a judgment or settlement awarding money to the plaintiff. For example, a lawsuit seeking an injunction or other type of non-monetary relief would not qualify for funding.
Underwriters for the funding company look at the extent of your injuries and the evidence proving that the other party was at fault to evaluate the value of the claim and the likelihood of the lawsuit ending in a settlement or judgment in your favor.
Learning more about pre-settlement funding
Get advice from your personal injury lawyer about whether a cash advance against the outcome of your lawsuit would be a good option for resolving current financial challenges. If it is, compare the rates and terms offered by different pre-settlement funding companies before submitting an application.