A court proceeding can be a time consuming and expensive process. When you file for a personal injury settlement in court, your other expenses like basic amenities and other costs do not wait till the court grands you a settlement. A pre-settlement loan is one of the options that a lot of personal injury plaintiffs have when awaiting a settlement. In some states, this kind of loan is also referred to as advance lawsuit funding, advance settlement funding, or a pre-settlement cash advance. Whatever you call it, this type of funding involves getting a loan on your upcoming settlement.
In exchange for agreeing to pay the settlement funding company with interest once the verdict is out, the company gives you the funds you need to see the claim through to its conclusion.
When you are a plaintiff in a court case, life outside the court does not stop for you. It goes on and your bills come to you at the expected time. It can be a stressful period when you have to spend for your court proceedings as well as try and lead a normal life.
It is under such circumstances that a pre-settlement loan comes as a boon. They ease your financial strain, require no credit history, serve as an income source in situations where you are unable to work. They help you with your bills and general living costs while you pursue what is the right recourse legally.
Remember that you can’t get a pre-settlement loan without your attorney’s consent. That’sbecause before the lender agrees to give you the loan, your attorney will need to work with them in determining the success chances of your lawsuit. You will then want the attorney to also help you in filling out an application form.
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Applying For a Pre-settlement Loan While Awaiting Settlement
If you have ever had a difficult time getting a loan from a bank, you may know how it’s like to apply for a structured settlement advance. These loans are made available by settlement funding companies to plaintiffs who have filed a lawsuit against another party. These companies provide plaintiffs with a quick turnaround time and a lower interest rate compared to a lot of banks.
There are factors that you must keep in mind when choosing a settlement funding company. Begin by finding a reputable company that has been around for a long time. That’s because you need a lender who is experienced in helping clients through the difficult period of the lawsuit. Keep reading as we tell you how to apply for a pre-settlement loan while awaiting a verdict.
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1. Get an Attorney and File a Lawsuit
You must file a lawsuit if you intend to apply for a pre-settlement loan. This involves hiring an experienced attorney to file a lawsuit on your behalf.
A lot of attorneys who represent clients that need settlement cash advances work on a contingency basis. In such a framework, an attorney agrees to represent a client seeking money damages. That’s because they’ll collect a percentage of your settlement upon the conclusion of the case.
2. Apply For a Loan From a Reputable Settlement Funding Company
After securing legal representation and filing a lawsuit, a settlement funding company will help you to cover your living expenses.
When you reach out to a lending company, a representative will evaluate the strength of your legal claims. They will then make an assessment of how much you’re likely to receive in a settlement once the verdict is reached.
That information will be used to determine how much money they can advance you. This includes the interest rate that you will pay if your lawsuit is successful.
3. Review the Proposed Funding Agreement
You and your attorney will receive a document outlining the terms and conditions of the proposed advance settlement funding. It’s important that your attorney does a careful review of the provided documentation.
That’s because your attorney is ultimately responsible for repaying the loan at the end of a successful settlement in most lawsuits. The plaintiff only receives whatever remains of the settlement after paying for the costs of the legal representation and court costs. There’s also the repayment of the litigation including interests and fees.
Keep in mind that by giving you an advance lawsuit funding, the settlement funding company is essentially “buying” part of your settlement upon the conclusion of your legal case.
4. Check If The Loan Is Right For You
There are factors to consider before applying for a pre-settlement loan. Begin by finding out from your attorney about how long it will take for your lawsuit to be concluded. That’s because resolving a case can take longer and you need to figure out in the course of interest on your pre-settlement loan.
You may also want to consider options like short-term disability assistance or borrowing money from friends and family. If the other loan alternatives are not feasible, then consider lawsuit advance funding as the best option.
Note that some settlement funding companies charge as much as 50 percent interest rate on pre-settlement loans. But for reputable settlement funding companies, they can charge a rate of as low as 1-3 percent. When considering a reputable lender, go for one that’s upfront about their process. Then determine the interest rates on a case-by-case basis.
It’s only the lenders who use a conservative underwriting process and evaluate cases based on merit that have low interest rates. Such companies also provide favorable terms. This is why you must start by speaking to your attorney and get all your questions and concerns addressed. Then you can accept a pre-settlement loan.
5. Speed is Everything
Once you get injured in an accident, things can quickly add up. You may lose your job because you’re unable to work. That’s when the bills start to add up. The medical bills start coming in. Then there is the rent that’s due, the car note, and the electricity bill that may be overdue. You don’t want to be dealing with all this at a time when you’re nursing injuries.
That’s why you want to ensure that you get the funds to cover your expenses as soon as you call the settlement funding company.
Remember that the insurance company knows that you need the money. As such, they’ll give you a low offer to squeeze you out of a fair settlement.
Some lenders may be good at getting clients pre-settlement loans. The problem is that they don’t understand that you need the funds now! There is no benefit in receiving a pre-settlement loan two weeks later when all the bills are due. That’s why you must check to ensure that your chosen company has a policy of issuing the loan as fast as possible.
Find out the method that will be used to get you the money. A regular mail may take a week to get to you. They may also be using bank accounts when maybe you don’t have any. These are some of the concerns you must raise before an application.
Conclusion
There is a relief that comes with securing a pre-settlement loan. That includes having funds available to cover for your living expenses and other bills that come with the lawsuit. This allows you to have enough time to negotiate for a favorable settlement. It also keeps you from going into debt while the case is pending.
Advance settlement loans are unlike traditional loans that require you to have a good credit history before securing it.
Finally, a settlement funding company can deliver an advance within a very short time, as short as one day.
