Exploring the Process of Applying for Settlement Funding

Lawsuits can be expensive and time-consuming. When bills mount, it may be necessary to seek outside help. While some borrow money from friends or family, settlement funding is more reliable.

A funding company evaluates your case, consults with your attorney, and estimates the potential case value to determine whether to extend an advance. It’s crucial to compare rates, as they can be pretty high.


The Application Process

Injuries from accidents are life-changing and often leave people unable to work or support their families. For these reasons, pre-settlement legal funding is a solution for many accident victims facing financial pressure while waiting for their cases to settle.

Unlike traditional loans, legal funding is not based on your credit score. Instead, the process focuses on evaluating your case, including your attorney’s opinion of its strength and potential value. The funds you receive can be used however you like without restrictions, which is essential for medical bills and living expenses after an injury. The advance is repaid, along with any interest and fees charged by the lawsuit funding company, if and when your case concludes successfully in your favor.

Choosing a legal funding company is essential and should be made with care. To understand the advantages and cons of each choice, compare offers, and meet with your personal injury attorney and a financial counselor.

During the application process, the legal funding company will request certain information about you and your accident and communicate with your attorney to evaluate your case. The company will then determine whether or not to extend you an advance and the amount they are willing to lend you based on their assessment of your case’s merits.

The Approval Process

While the settlement funding application process can be more straightforward than a traditional loan, the approval process is still an evaluation of risk. Since the company is essentially betting on you, they need to be sure that your case will succeed and result in a large settlement to give them a return on their investment. Because of this, the company will evaluate the strength and value of your case and consult with your lawyer as needed.

The company will then determine the amount they will advance you and communicate this with your attorney if you are approved for pre-settlement funding. The company will also usually look at your credit report to see if you have sufficient assets and income to repay the advance. Because of this, the companies often have a higher bar to qualify for lawsuit advances than traditional loans.

Exploring other options before applying for settlement funding is essential as it may be costly and incur interest charges. Borrowing money from relatives or friends, or using a credit card, may make more sense. 

The Payment Process

Financial stress can cause a host of problems in your life. If you cannot work due to your injuries and are not receiving regular income, the pressures of living day-to-day can be even more challenging to manage.

Settlement money, litigation loans, or pre-settlement funding provides much-needed financial respite while your case is being resolved. The funding company is not lending you money but purchasing a portion of your future settlement or judgment award. Once your case is settled, the company will receive its payment, and you will get your settlement money now.

The settlement funding industry is regulated in many states and follows best practices. Unlike other methods of getting cash quickly, like payday loans or credit card debt, settlement funding companies usually do not charge high-interest rates.

There are other ways to obtain financial relief while your case is pending, including asking for help from friends and family. These arrangements can avoid the awkwardness of asking for money and may be more cost-effective than using a lawsuit loan or settlement advance. However, exploring all options and determining which one is right for you is essential. Getting money fast is important, but you don’t want to pay for it later.

The Repayment Process

Expenses for food, housing, automobiles, and medical bills can pile up as you wait for your case to settle. Traditionally people with a pending lawsuit only had a few options for financial relief other than using their credit cards or borrowing money from friends and family. Today, however, those awaiting a settlement can receive pre-settlement funding. This arrangement allows you to sell a portion of your expected future settlement or court award in exchange for an advance of cash. The amount you receive is deducted from your final settlement or court award.

If you decide to use this form of financing, you must understand the fees and interest rates. These are generally high and should be considered carefully before pursuing this option. Additionally, this type of lending is not regulated, and you should always talk to your attorney before making this decision.

To qualify for pre-settlement funding, you must be a plaintiff in an ongoing personal injury case such as auto accidents, civil rights cases, worker’s compensation, sexual abuse claims, dog bites, medical malpractice, or product defects. You must also be working with an attorney on a contingency fee basis. It is also critical that your case has a strong likelihood of winning. You do not owe anything if you lose the case, and there are no credit checks required, but the legal funding company takes a risk by investing in your case.