What is Pre-Settlement Funding?
The legal process can be expensive. As a plaintiff, you may have personal bills, medical bills, and other mounting expenses related to your case that you simply can’t wait any longer to pay. This is where pre-settlement funding comes into play.
What is Pre-Settlement Funding?
Pre-settlement funding – also known as litigation funding, lawsuit loans, or car accident loans – is a special kind of loan that can be used by victims and plaintiffs to access money.
Instead of waiting until a case goes to trial, which can take months or years in a complicated situation, pre-settlement funding companies advance a portion of the expected proceeds to the individual. In return, the plaintiff or claimant assigns a portion of the recovery to the funding company.
Any plaintiff or claimant is a potential candidate for pre-settlement funding. However, it ultimately comes down to the funding company as to whether an individual qualifies. Much like a traditional loan vetting process, these companies do their homework and decide who qualifies.
But unlike a home loan, for example, these loan offers are not based on creditworthiness or financial health. Instead, they’re almost exclusively based on the strength of the plaintiff’s case.
What Do Lawsuit Lenders Look for When Evaluating Cases?
Every lawsuit lender and its underwriters have their own unique criteria and metrics. However, here are some of the general factors that come into play when evaluating a case:
- Do you have an attorney? This is the first step to being eligible for pre-settlement funding. Most funding companies will require you to have an attorney representing you. This way they know you have someone educated in the process fighting for you to get the most money from your settlement.
- Who is your attorney. You’re much more likely to get a lawsuit loan if you have an experienced attorney with a positive track record than if you have a young, inexperienced lawyer who just recently passed the bar exam.
- Type of case. Not all cases are good candidates for pre-settlement funding. You’re most likely to have access to this sort of funding if you’re involved in a personal injury case where there’s a pretty clear opportunity for a judgment or cash settlement.
- Injuries & treatment. What were the extent of your injuries and what have you been doing to treat, rehab and get better? Have you been going to treatment regularly or have you been sporadic?
- Settlement potential. Underwriters are experienced case evaluators and will analyze the potential of your claim and the most likely settlement amount. They’ll also account for the costs of the lawsuit, your attorney’s fees, and other expenses. Ultimately, they want to know that the case is worth funding.
- Litigation status. The first thing a lawsuit lender wants to know is the active status of your claim. Is your case in litigation? This isn't necessarily a positive or a negative, it just helps the funding company know how long your claim is possibly going to be open.
- Plaintiff’s commitment. The underwriters want to make sure you’re committed to seeing your claim through. After all, they need a settlement or judgment in order to recoup their money and generate a positive ROI.
Reasons to Use Pre-Settlement Funding
Being a good candidate for pre-settlement funding is one thing. The question is, do you need a lawsuit loan? Here are some of the common reasons why plaintiffs and claimants take on this type of funding:
- Loss of income. If you’re injured and unable to work, you have no income. And if you have no income, then you’re unable to pay bills or make ends meet. Waiting for a settlement isn’t an option – you need cash now. This is the most common reason for pursuing pre-settlement funding.
- Slow process. In a perfect world, a car accident settlement or personal injury judgment would be handed out in a matter of days or weeks – not months or years. Unfortunately, there’s a lot of red tape involved in lawsuits. If you can’t reasonably wait this long, a lawsuit loan is helpful for bridging the gap.
- Urgent needs. If your current financial situation is already a little hectic, a lawsuit loan can help. For example, if you’re already behind on credit card payments or have extensive medical bills piling up, a loan can help you alleviate some of this pressure.
How to Find the Right Pre-Settlement Loan
If you’re in a situation where you need a pre-settlement loan, you’ll have to identify which loan/lender is right for you. Here are some factors to consider:
- Experience. Companies pop up in this space all the time. Some see it as a quick way to generate money by preying on people in tough situations. But here’s the deal: They never last long. The companies that have been around for a while are the ones who actually care about their clients and have systematic processes in place for giving plaintiffs and claimants the funds they need.
- Reputation. You can ask around and find out what sort of reputation a lender has. You can do this through online searches, as well as by talking to attorneys and others in the field. A pre-settlement lawsuit lender with a good reputation is worth its weight in gold.
- Reviews. Be sure and check online reviews. Companies that generate a lot of positive reviews will usually be a good place to start. If past customers have been happy, chances are future customers will be as well.
- Interest rate & fees. You definitely want to pay attention to the interest rate and fees a company is offering you. This directly equates to the amount the loan will cost you. Unlike other loan types – such as mortgages or student loans – there can be massive differences in interest rates and fees from one company to another. Make sure you’re taking this into account.
- Clear terms. Vague and confusing contracts are not only dangerous, but they can also be unethical. When evaluating different lenders, read through the contract and see if it makes sense. If something isn’t clear, consult your attorney and have them read through the contract. If they have trouble understanding the terms, this isn’t a good sign. But if they give you the “okay,” you’re on the right path.
Why Choose Capital Now Funding?
Not all lawsuit lenders are created equal. There are some companies that simply see you as a means to an end – a way to generate a high ROI. Then there are companies like Capital Now Funding, which are committed to working with you to ensure you get the right amount of money at the right time in order to alleviate whatever financial pressure or friction you’re currently experiencing. Capital Now Funding is also the only company that doesn't charge recurring interest on their loans. Instead they charge a one-time fixed fee. This way your payoff is never at risk of escalating.
Want to learn more? Click here to apply for a pre-settlement loan with Capital Now Funding. The application process is free, and we’d be happy to walk with you through the process. For questions, please call 1-855-CAP-FUND.