Pre-settlement Funding

Pre-settlement funding is a financial arrangement where a plaintiff in a lawsuit receives a cash advance against their expected future settlement or court award before the case is resolved. It is sometimes called a "lawsuit loan," but it is not actually a loan. Instead, it is the sale of a portion of the potential proceeds from the lawsuit in exchange for immediate cash.

Key features of pre-settlement funding include:

• No repayment if you lose: Unlike traditional loans, you only repay the funding if you win or settle your case. If you lose, you owe nothing.
• Use of funds: The money can be used for any personal expenses such as mortgage or rent, utility bills, medical bills, vehicle payments, credit card bills, child support, and other living costs.
• Amount advanced: Typically, plaintiffs receive about 10% to 20% of their anticipated settlement amount upfront.
• Application process: The funding company evaluates the case details, including the likelihood of winning and the defendant’s ability to pay, often requiring attorney involvement.
• Costs: While helpful for covering expenses during lengthy litigation, pre-settlement funding can involve high fees and interest rates, so it’s important to review terms carefully.

In summary, pre-settlement funding provides plaintiffs with financial support during the often long wait for a lawsuit to settle, allowing them to manage expenses without monthly payments or credit risk, as repayment depends on the outcome of the case.