What is pre-settlement funding

Pre-settlement Funding 101

Repayment of your lawsuit cash advance depends entirely on how successful your case is. You don’t have to pay back anything back unless you win your case. If you take lawsuit funding and win your case, then your attorney pays back our lawsuit cash advance(aka lawsuit loan), when he/she distributes the settlement money. It means we don’t look at credit, or employment status. The only thing we care about is the quality of your case, and the value of your case. The process is really simple, and it takes no more than a week in order to get a lawsuit cash advance from most lawsuit funding companies.
First step when getting a lawsuit loan: First step to getting a lawsuit cash advance is learning about what it is. You should ask your attorney, what a fair rate is. Learn about the benefits, risks, and costs, so you can make the best decision possible when speaking to numerous pre-settlement funding companies.
The second step is understanding your case: It’s important to know what your case is worth. You should never get a lawsuit settlement funding without understanding your case value. You should consult your attorney to understand how much your potential case might be worth. If your case has liability, damages, and there’s adequate evidence/discovery, then you shouldn’t settle for a lawsuit cash advance with compounded interest rates/usual fees. Knowing the strength of your case gives you leverage when you negotiate with a pre-settlement funding company for a lawsuit cash advance.
Do you need the money?: Lawsuit cash advances are expensive. Don’t let anyone tell you otherwise. Settlement cash advances are an investment in your case by an outside party. Because it’s NOT A LOAN, some lawsuit funding company charge high rates and fees. Always weigh other options before deciding for a lawsuit loan. Pre settlement loans should be a last resort.
Are you being pressured by a lawsuit funding company?: Don’t let anyone tell you the contract has a deadline, and to pressure you into signing. Don’t be bullied. Take your time, and make the BEST decision for your family.


If you’re running out of money, and unable to pay your bills – then a lawsuit loan might be right for you. Running out of money isn’t a good feeling. People turn to different things when they run out of money. It’s always best to exhaust all other sources of money, such as your 401K, and other savings you may have. It might even be a good idea to speak to family members – before you consider a lawsuit cash advances. These loans aren’t cheap. They are “risk-free,” because if you lose your case – you don’t have to pay a penny back. Below are some comparisons of lawsuit funding versus traditional loans.
“Lawsuit cash advances,” aren’t really loans. The correct term is they are cash advances. Lenders, offer a cash advance against the future value of your claim. Regardless of whether it’s a business dispute, or a personal injury claim, at the end of the day you’re a plaintiff in a claim – and that claim has value.  The lawsuit funding company is speculating that the money you make in your claim will be enough to cover the amount loaned out plus interest. There’s an enormous amount of risk attributed to lawsuit loans, and that’s why lenders charge higher than average interest.  Because they are cash advances, pre-settlement funding cash advances don’t require repayment in the event you lose the personal injury claim. If you lose, you are not obligated to repay the loan. In contrast, with a traditional loan, you will probably have a lower interest rate. Here’s the tradeoff though. Traditional loans, from a bank, for example, must be repaid. Traditional loans are based on your credit, and are extended based on the fact you are a credible borrower. Having said that, they are not being advanced against the future value of a claim. They are a traditional loan, and thus must be repaid like a traditional loan is. If you don’t repay it, then you can be sued – and you could find your credit score destroyed because of this.
There’s no getting around it – lawsuit cash advances are very expensive. When you pay a lawsuit funding lender, you pay the principal you borrowed, plus a funding fee/interest payment. This fee could end up being double or triple what you borrowed. The cost of the lawsuit cash advances depends on how long your case lasts. It’s not unusual for personal injury cases to take months/years to settle. The rates can run between 15-60% a year. On a $25,000 loan, it’s possible the interest could run $10-$13k the first year. The interest is usually compounded monthly, which means if you borrow $25k, and it takes 2 years to settle – then you’d have to pay $32k plus the $25k borrowed.


One of the most frequently asked questions we hear is what happens if you win the case, and what happens if you lose the case. At the end of the day, winning the case is a great thing! Here’s the good news: you are only required to pay back if you win your case. If you lose your case, you don’t owe a single penny. If you win your case your attorney will repay the lawsuit funding company out of the proceeds of your award. The amount that your attorney is required to pay us is calculated based on a formula. You will probably owe less money if your case settles sooner rather than later. The amount you owe depends a lot on the type of case you have, and what state you’re in.
While your case is pending, you don’t have to make any payments – and there’s no risk to you. Moreover, you can use the money for anything: house payments, car payments, rent, tuition, pretty much anything. More importantly, if you lose the case – you owe nothing.