The average lawsuit takes months or even years to reach a conclusion. But if you filed a personal injury suit, you probably don’t have months or years to wait to pay your bills or recover your losses.
Pre-settlement funding is a product that helps you get some cash quick, so you can stop the debt collectors from calling. Here’s what you need to know about taking out loans on settlements.
What Is Pre-settlement Funding?
It’s important to note that pre-settlement funding isn’t a loan. Although you will repay it when your settlement check comes in, you only pay when you win your case. If the court doesn’t find in your favor or doesn’t award you a settlement, then you don’t have to pay it back.
Who Can Get Settlement Advances?
The best pre settlement funding companies will only lend to those who meet specific criteria.
First, you need to have an attorney and be actively pursuing your case. Some companies require your case to be ‘mature’ before you can apply. A ‘mature’ case means that you are far along in the process and that you are largely just waiting for the check to be cut.
However, all companies will want to research your case before making you an offer. Because you don’t need to pay back pre-settlement funding if you lose, there is a significant risk for the company.
Typically, they will want to work with your attorney to review your case.
How Much Can You Borrow?
Each company sets its own limits on the maximum borrowing amount. In some cases, a lawsuit loan company may issue you a second advance to supplement the first one.
However, it’s important to borrow responsibly. You do need to pay interest and fees on what you borrow. So, it’s not a good idea to borrow a substantial amount, particularly for a long period of time. You could see the rest of your settlement tied up in fees.
The best policy is to borrow what you need to cover your bills and leave the rest for later.
When Do You Pay Back the Settlement Advance?
You don’t have to worry about making payments on the advance over time.
Instead, your attorney will cut the lawsuit loan company a check from your settlement once it arrives.
By the end, you’ll get the remaining balance of the settlement (after all the fees come out).
Will You Choose a Settlement Advance?
Lawsuits take a long time to wrap-up, but your bills won’t wait for your settlement check to clear.
Pre-settlement funding helps plaintiffs get the cash they need while waiting on their settlement check. It comes at a cost, but you only need to pay it back when you win. And your attorney takes care of the payment for you.
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