Pre-settlement funding is money that you can be given before a legal case has had a final ruling or even before any money has been awarded. If you do win, the organization that funded the plaintiff will take what was advanced to you as well as a bit extra. This can be useful to individuals who have been injured and can’t work or if you simply need cash now.
Do you need Pre-Settlement Cash now?
Most people do not need any type of settlement funding, however life can always find a way to complicate things. What if you were in an accident that injured you and prevented you from going to work? After a few months or even weeks you might run out of money and need money to pay for hospital bills, property damage or any other financial strains. Being out of money due to unforeseen events will force people in a weaker position to bargain or make long term financial and legal decisions. If you are forced into a crippling financial situation because of a short term cash flow problem you can lose most of your bargaining power and leverage. Even if your case is worth a million dollars, you might not see any of that money for months or even years. Sometimes, defendants will rush to settle your case for a much lower amount because they know you need money now. By getting a settlement advance you are able to keep up with your monthly expenses and clear up other financial problems.
Are Pre-Settlement funds the same as a loan?
The main difference between a loan and a pre-settlement cash advance is that a loan will have to be repaid regardless of the outcome of your lawsuit. However, a pre-settlement cash advance will typically not need to be repaid if you do not receive a favorable ruling or if you never actually receive payment.
However a pre-settlement cash advance is very similar to a loan in the sense that it will need to be repaid with interest. How much interest needs to be repaid is based on how much time and risk it is for an organization to advance you money.
Loans are typically approved based on your ability to pay it back. The bank or other financial institution will look at your credit score, income and assets to determine if you are eligible for a loan. These factors will impact your interest rate and how much money you can borrow.
Unlike a traditional loan, when applying for pre-settlement cash advance the only thing that matters are the specifics of your case. A pre-settlement advance is not related to your credit history or employment status. These factors may prevent individuals from being eligible to receive a loan, this makes a pre-settlement cash advance a viable alternative.
If you are interested in getting a pre-settlement loan be sure to shop around and try to find the best rate for your case. Depending on your state, size of cash advance and type of legal case your lawsuit cash advance interest rate can vary between 2.5% – 4.99%.
Most pre-settlement companies will not reveal their interest rates on their website or openly share rate information. Because a pre-settlement advance is not a loan, the financial regulations of a cash advance are different. This is why it is so important to try and get the lowest rate possible and ensure you are dealing with a reputable company with a fair interest rate.
Because a cash advance is not technically a loan, some states have laws restricting some companies from offering a settlement loan in their state. In fact in some states, like Florida, pre-settlement funding is outlawed completely. This is because some companies can take advantage of plaintiffs in need of cash. Even if you win and get a financial settlement in your favor, depending on your interest rate, you may have to pay back most if not all of your settlement.
If you are considering getting a pre-settlement loan be sure to plan out your financial future to ensure your financial safety. In most situations your lawyer will be involved and must send essential information to the pre-settlement advance company. Consult your legal adviser about this issue before committing to a pre-settlement cash advance.