What Is Pre-Settlement Funding?

If you’re a plaintiff in a personal injury case, you may have a long wait before you receive compensation for your damages. That’s where pre-settlement funding can come in handy. This financial agreement allows you to receive a percentage of your expected settlement before your case is concluded.

Pre-settlement funding offers a solution to those enduring financial hardships as a result of their personal injuries. If you were injured by someone else’s negligent actions, you may need some help covering your living expenses and medical bills until you are compensated.

What Makes Pre-Settlement Funding Different from Traditional Loans?

Many funding companies such as Pinnacle Legal Funding offer pre-settlement funding as a non-recourse loan. The advantage is that if you don’t win your case, you don’t need to repay the funds. It’s less risky for you, but more so for the funding company.

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There are other types of pre-settlement funding but non-recourse loans are the most common option. They tend to have a higher interest rate to mitigate the risk to the lender. Banks typically do not offer non-recourse loans, and because traditional loans require credit qualification, some injury victims can’t get approved.

Pre-settlement funding is easier to secure. It only requires that you have an attorney who is in the investigation process of your personal injury case. Additionally, the pre-settlement funding company will want to determine if your case has a strong possibility of success.

You don’t need permission from your attorney to get this type of funding. Your attorney will be consulted by the funding company to get more information about the case to see if it is strong. While your attorney’s approval isn’t needed, you may want to ask their advice to get valuable insight.

Types of Cases That Can Qualify for Pre-Settlement Funding

Pre-settlement funding is only provided for personal injury cases. The funding company will consider the factors of your case to see if it has good odds of success. Most of the time, this type of funding is provided for motor vehicle accidents, medical malpractice claims, slips and falls, and nursing home neglect.

In order to get pre-settlement funding, you will need to apply using your case details, including legal documents. You will also need to provide your attorney’s information. After filling out an application, you may be offered up to 20% of your expected settlement. Since approval is usually within days, you should soon have the money you need to keep afloat until you receive your settlement.

Should I Apply for Pre-Settlement Funding?

Pre-settlement funding can help you make ends meet while you await the completion of your lawsuit. In addition to this advantage, it allows you and your attorney to negotiate a better settlement because you will no longer be desperate to get your money. In most cases, you don’t need to repay anything if you don’t win your case.

There are a few disadvantages, such as higher interest rates that will be applied if you win. You may not even qualify if your case isn’t perceived as being strong enough for a win. In that case, you’d need to see if you could get approved for a traditional loan.

There are many pre-settlement funding companies, which means you should review all their details first before choosing one. Ask for quotes and make sure you understand the terms of the funding and the interest rate. Reputable companies will be happy to answer all of your questions and usually offer 15% to 20% as the interest rate.

It’s a big decision you need to think through first. However, if you were struggling before your injury and your case is expected to drag on, pre-settlement funding can be the solution you need.