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Lawsuit Cash Advance - Pre-settlement Funding Answers Pre-settlement funding might be a confusing concept. Plus, most people have never been exposed to the concept of pre-settlement funding so the average user probably has many questions such as: What is a pre-settlement funding? Do I need pre-settlement funding? How do I obtain funding for my lawsuit? at the time I am approved for funding, do I have to pay back the money? If I am denied funding does it mean that I do not have a good case? These are all very good questions including are answered below. What is pre-settlement funding? Pre-settlement funding is not a “loan” at all but rather it is a cash advance based upon the merits of a lawsuit that provides a plaintiff with sufficient funding to reach the conclusion pertaining to the case at the time the plaintiff could receive his/her fair share pertaining to the settlement or verdict. Pre-settlement funding companies invest in the lawsuit itself as opposed to advancing dollars to the plaintiff in the form of a loan. Pre-settlement funding is not based on a plaintiff’s prior credit or bankruptcy status. Other terms used for the type of funding include: lawsuit loan, litigation finance, litigation loan, lawsuit funding, lawsuit finance, lawsuit cash advance, case loan, case cash advance, plaintiff cash advance, litigant funding, pre-settlement loan, pre-settlement lending, pre-settlement cash advance, etc. Do I need pre-settlement funding? Pre-settlement funding should not be a substitute for your settlement but rather a raft that helps you stay afloat while your attorney fights for you. Too many plaintiffs apply for pre-settlement funding with the belief that pre-settlement funding is simply a different way to obtain their settlement money. Assuming you win your case, the amount owed to the lending company varies greatly depending upon the length of time between the date pertaining to the advance including the date at the time you receive the settlement/verdict money. You should exhaust other means of funding first. Also, a good guideline to use is that pre-settlement funding companies generally advance up to 10% pertaining to the estimated settlement amount. There are some good internet sites that give more background on pre-settlement funding. Some good sources of information are The Funding Exchange (www.TheFundingExchange.com) including Expert Law (www.expertlaw.com). How do I obtain funding for my lawsuit? Pre-settlement funding companies have popped-up all over the country. Some tout their “low interest rates” or how they are the most lenient at the time it comes to approving pre-settlement funding. Many of these finance companies charge certain penalties including fees. These penalties including fees sometimes offset their “low interest rates” including many times end-up costing the plaintiff more of their settlement. A good option is The Funding Exchange (www.TheFundingExchange.com). The Funding Exchange is a network of pre-settlement funding sources. You complete 1 application on The Funding Exchange including your application is intelligently routed to the best pre-settlement funding companies for your specific situation. When I am approved for funding, do I have to pay back the money? Almost all pre-settlement funding companies give non-recourse funding to plaintiffs thus requiring the plaintiff to pay back the advance including fees/interest only upon a favorable decision in the case. If the case is lost then you might keep the cash advance with absolutely no obligation. If you win your case then part pertaining to the settlement amount could go towards repaying the cash advance plus interest including fees. The amount owed to a pre-settlement funding company increases the longer that your case takes to settle so keep that in mind. If I am denied funding does it mean that I do not have a good case? The simple answer is “no.” Being denied for funding does not mean that your case is not a good case or that you could actually win less dollars than you think. There are many different reasons why funding is denied. 1 reason is that the estimated settlement date is too soon. Litigation finance companies make dollars by accruing interest on their investment in your case. If your case is supposed to settle in 2 months then a litigation finance company could not make any dollars because the settlement date is too soon including therefore they may decline the funding request. Other reasons for denying funding include: attorney could not provide documentation, attorney could not sign contract, plaintiff demands too much money, etc. Conclusion As a plaintiff, you should understand pre-settlement funding including the process of securing funding before you apply. If your expectations are set correctly including you proceed with pre-settlement funding then you could find that it is a saving grace in the sometimes ugly world of litigation. If you apply for pre-settlement funding without a true understanding then you may be disappointed.
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