Pre Settlement Funding

Pre settlement funding is basically a cash advance to pay off current expenses while a personal injury settlement is being determined.  Once the lawsuit is finished and a structured settlement has been set by the judge, the company that funded the cash advance will collect the money that was given to the plaintiff.  Typically, pre settlement funding is given during cases that are long and drawn out and where the plaintiff has run out of my money or needs additional funding to help with medical and legal expenses.  The pre settlement funding companies are taking a risk and are seeking a return on their investment as they are investing on the plaintiff and lawyer to win the settlement so that they will not lose their money.  This is considered a risky investment as the investment company that is backing up the lawsuit cannot collect on their funding if they plaintiff does not win their lawsuit.  These cash advances cannot be considered the same as a loan because the person lending the money does not have the right to collect on their money unless the plaintiff wins the personal injury settlement.  The only way that the lender can collect on this cash advance is if you win your court case and receive an annuity payment.  If you lose, then you have no legal obligation to pay them back.  So why in the heck would lenders give you a cash advance if it might be possible that they cannot get their money back?  The reasons are that you have to pay high fees to borrow this money. 

So how does pre settlement lawsuit funding work?  First of all, you cannot borrow and money from your attorney as this is considered a conflict of interest between you and your personal injury attorney which means that the lawyer cannot work on your case.  Typically, you will be charged fees for being lent the money just like you would if you were to get a payday loan.  There is many times where the finance fees cost more than what you would receive from the structured settlement so you will need to weigh the cost versus benefit of obtaining these type of funds.  The reason why personal injury pre settlement funding can get expensive is due to long and drawn out court cases.  The longer the case, the longer you will have to pay financing fees.  However, if you do not think that this is the way to go, then try obtaining a home equity loan or drawing from a line of credit.  However, people with bad credit or bad credit history will have a harder time obtaining a line of credit loan for this type of venture.  You can also trying to get a payday loan but this is not considered a good idea as you will be paying on this forever if you keep rolling over your loan.  Try borrowing from family members and try to pay them back once you receive money from you settlement. 

How does it all work? When you become injured and talk with a lawyer, you will have to state that you need additional funding.  The lawyer can contact a pre settlement funding company for you but cannot outright let you borrow money from them or the firm.  The finance company that you go through will go through your case and will calculate the costs of the settlement using a personal injury settlement calculator.  You will receive a cash advance amount based on the amount of the structured settlement prediction.  Based on the amount you receive, you will pay a flat fee or a monthly fee to the finance company.  If you win the case, the amount borrowed will be taken out of your settlement and paid directly to the finance company.