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Understanding Pre Settlement Funding – What You Need to Know 

Understanding Pre Settlement Funding – What You Need to Know

Lawsuits can be a long, time-consuming, and costly process. If you are seeking financial relief, consider pre settlement funding.

Unlike the high-interest rates on credit cards, reputable lawsuit funding companies offer transparent terms and adhere to ethical practices. However, before applying, ensure you understand all the fees involved.

How It Works

Pre-settlement funding is legal and available to plaintiffs in personal injury cases involving auto accidents, civil rights, sexual abuse claims, dog bites, workplace injuries, medical malpractice, product defects, slip and fall (premises liability), and more.

To be eligible forĀ pre settlement funding, you must work with an attorney on a contingency fee basis. Your lawsuit seeks monetary compensation for damages due to a negligent act or accident.

If you have a strong case and a solid estimate of your settlement, you can qualify for up to 20% of your estimated settlement funds. Unlike bank loans requiring collateral and credit approval, settlement advances are non-recourse loans, meaning you do not have to pay back the loan if your case fails.

Lawsuit funding is an excellent option for those who need cash to pay bills or meet urgent financial obligations. However, it is important to compare offers from different funding companies and consider each contract’s terms before signing. Also, work with a company that doesn’t charge broker fees.

This is a significant cost that can significantly increase the amount you pay for funding. You should also consult with your attorney and a financial advisor before making final decisions. This can help you avoid unnecessary debt and save money in the long run.


Lawsuits are expensive and time-consuming, and the wait for your case to settle can be stressful. Pre-settlement funding provides cash for plaintiffs to help pay rent, expenses, and other living costs so they can focus on their lawsuit without worrying about how they will afford necessities. This type of financing is unlike a traditional bank loan, and the best legal funding companies will disclose all fees upfront so you can make an informed decision.

Before offering funds, a legal funding company will typically evaluate the strength of your case, which is why it’s important to work with an experienced attorney. The legal funding company will assess liability, available evidence, and the likelihood of winning the lawsuit. Generally, stronger cases are more likely to be approved for funding.

The stage of the lawsuit will also impact eligibility. Some companies may only offer funding at certain stages of the lawsuit, and others will prefer to fund a lawsuit close to trial.

To qualify for pre-settlement funding, you must be the plaintiff in a personal injury case seeking monetary compensation for damages related to auto accidents, wrongful death, medical malpractice, slips and falls, product defects, or workplace injuries. You must be working with an attorney on a contingency fee basis and have the potential for a large verdict or settlement.


The amount offered by legal funding companies varies. Still, you can expect to receive a maximum of 15-20% of what the company estimates your final settlement will come to after attorney fees and costs are paid. You can compare this to a personal loan, which typically comes with higher interest rates and requires collateral or credit approval.

The best part of pre-settlement funding is that, unlike a loan, you don’t have to worry about being held personally liable for repayment if your lawsuit loses. Because the funding company assumes all of the risk, it is considered a non-recourse transaction.

It can take months or even years before your negligence-based claim is settled. That can leave you with expensive legal bills and personal expenses, causing financial hardship. Pre-settlement funding can provide you with the money you need quickly and help ease the stress of your situation.

While there are a few bad apples in the lawsuit funding industry, most legal finance companies treat each case with care and have the client’s best interest in mind. It’s important to shop around and find a company that offers competitive rates and will provide you with the best service.

It is also important to understand the regulations in your state. Some states limit the amount of money that can be advanced, while others require a certain level of transparency and protection for borrowers.

Time Frame

Compared to other types of loans, pre-settlement funding is risk-free money you don’t have to pay back until after your settlement. The company you work with will determine how much it can advance to you based on the strength of your case and its estimated total value. You may receive as little as 20% of your expected settlement amount.

The best companies will not charge a credit check or an application fee. They also won’t charge you bogus processing fees that can cost you hundreds of dollars.

Once you receive your money, you will have complete freedom to use it for whatever you like. Many of our clients use it to cover bills and expenses they can’t afford while they wait for their case to settle. Others invest the funds and use them as income once their case is settled.

The key is to research all options for financial relief during a lawsuit and consult with your attorney before choosing anyone. Understanding how pre-settlement funding works can help you decide whether it is a good option for your situation.

Choosing a reputable funding company and carefully comparing offers is important. Remember that you can always say no if the terms are not right. It’s also worth considering other forms of financial assistance, such as loan consolidation or debt relief programs.

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