Pre-Settlement Funding

How Does Pre-Settlement Funding Work?

Only 40 percent of Americans have enough money in their savings to cover a $1,000 emergency. This means that when wage earners are side-lined by a serious injury, they rarely have the savings they need to cover their expenses while they wait for their lawsuits to secure the compensation they deserve.

Pre-settlement funding can bridge the gap. But who can apply for pre-settlement loans and how do they work? Here’s what every plaintiff needs to know.

Pre-Settlement Funding Basics

Suffering a serious injury can throw a person’s life into instant disarray. Injured adults often cannot work and find themselves wondering:

  • How to pay for a lawyer to handle their lawsuits
  • How to handle the medical bills that pile up quickly
  • How to cover the costs of daily living with no active income and limited savings

For many, pre-settlement advances provide the solution to these and other questions.

Unlike traditional loans, pre-settlement funding is not a form of debt. Rather, it is an advance on the anticipated money that plaintiffs will receive when they settle their cases. Here’s how it works.

The Process

The process of applying for and receiving pre-settlement loans is straightforward.

Plaintiffs and their attorneys provide funders with basic information about their case. The funder uses that information to determine how much money they can advance the plaintiff. The funder then informs the plaintiff of the total amount they can advance them and gives them an easy-to-understand contract explaining the loan terms.

Plaintiffs have the opportunity to review the contract with their attorneys or financial advisors if they wish. When they’re ready, they can sign and return the contract. Funders then provide the advanced funds, often in less than 24 hours.

Recipients are then free to use those funds however they would use any other form of income. This can instantly resolve the stressful questions of how to pay for legal fees and other expenses while short on income.

When the plaintiff settles their case, their attorney will automatically repay the money owed to the funder out of the settlement. They will then give the plaintiff the rest of the settlement money. This makes the entire process stress-free and seamless for plaintiffs.

The Details

In order to apply for pre-settlement advances, injured parties must:

  • Have an attorney
  • Have an open and active lawsuit
  • Have a reasonably strong case against the defendant

Without an open case, there can be no settlement and without a prospective settlement there can be no funds to advance. Having a lawyer is a must because working with an attorney dramatically increases plaintiffs’ likelihood of success.

Pre-settlement loans are a risk-free option for plaintiffs worried about the cost of legal fees, daily living, and medical bills while their lawsuits wind their way through the legal process. If plaintiffs do not win their cases and receive a settlement, they may keep the money they received with no obligation to pay it back.

Visit for a deeper look at how pre-settlement funding works and how it can benefit plaintiffs and their families.

Learn More

When it comes to legal issues, knowledge is power. Learn more about pre-settlement funding and other tools that can help you come out on top in your case by browsing our other great articles today.

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