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Many plaintiffs with personal injury lawsuits end up accepting low-ball offers from the defendant’s insurance company. Why is that so?
During the time of lawsuit, the plaintiffs may experience financial difficulties and are unable to meet the vital living expenses. Thereby, they settle for the amount of money that is less than their actual claim.
But besides accepting the settlement offer, there is another option available for plaintiffs to get through a difficult financial period. This option is known as a “pre-settlement advance”.
This article has presented the detailed concept of pre-settlement advances for your ease of understanding and to help you in taking a wise decision. So, let’s start.
- What is a pre-settlement funding?
Pre-settlement funding is a kind of financial support for plaintiffs/ claimants that have a pending personal injury lawsuit. It is also known as a lawsuit loan.
Lawsuits take longer time to settle than expected as an estimated settlement time for an average personal injury case is approximately 18 months. During that time period, the majority of the plaintiffs require money to cover their general living costs and other expenses. This need of money puts extra pressure on the plaintiff to settle for the lesser amount than the actual claim. There’s also general liability insurance
Therefore to help plaintiffs in such difficult times, a concept of pre-settlement funding was introduced. This funding helps plaintiffs in two major ways.
- It minimizes the financial burden of the plaintiff as the advance covers the major expenses such as medical bill, groceries, utilities, mortgage or rent, automotive expenses etc.
- It provides necessary time to the plaintiff’s attorney to work on the lawsuit in order to maximize the value of plaintiff’s claims.
- What kind of lawsuits qualifies for funding?
Different lawsuit loan companies offer funding for various personal injury cases. Listed below are some of the cases that can be qualified for the pre-settlement advances.
- Workplace accidents/ injury
- Wrongful death
- Product liability
- Elevator accident
- Medical malpractice
- Legal malpractice
- Motor vehicle accidents
- Car accidents
- False arrest
- Commercial lawsuits
Besides that, a plaintiff can always contact the funding company to know about other legal cases that qualify for the lawsuit loans.
- Is pre-settlement advance a loan?
You will be surprised to know that a pre-settlement advance is not like a “traditional loan”. It is a non-recourse advance means that the lawsuit loan a plaintiff has been granted by the funding company will be backed by his or her pending lawsuit.
For example: As a plaintiff, if you win your lawsuit then your law firm will repay the cash you took from the funding company. But, if by any chance you lose your legal case, you do not have to pay back any cash and a pre-settlement advance is all yours to keep.
- How can you as a claimant apply for a pre-settlement loan?
There are three simple steps that can be followed to apply for a lawsuit loan legally.
- Hire a Qualified Attorney
The foremost step to apply for a pre-settlement loan is to hire a qualified attorney. He or she will then file a case on your behalf either in a state court or federal court. The representative lawyers of lawsuit loans work on a contingency fee and only receive their payment at the end of the verdict.
- Apply for a Pre-Settlement Funding
After filing a lawsuit through your lawyer, the next step is to target a trustworthy funding company. For that purpose, make a list of all best lawsuit loan companies available in your state. Only after thorough research, chose a funding company that is upfront about their process and determines interest rates on a case-by-case basis. The companies who use a conservative underwriting process and evaluate cases on the merit are the ones that offer low interest rates with favorable terms.
Once you decided a funding company and apply for the lawsuit loan, a representative of that company would look into various factors of your legal claims such as:
- Liability: Who is at fault for the accident?
- Causation: How the defendant’s actions cause you an injury?
- Strength: What is the strength of your lawsuit?
- Settlement offer: How much you are going to receive in a verdict?
That person will evaluate all these factors to determine how much advance a company can provide you and what interest rate must be charged if you win the claim.
- Review the Proposed Funding Agreement
After their complete working, a funding company will send you and your lawyer a document that states the necessary terms of the proposed lawsuit loan. This is one of the critical phases as it demands yours and especially your lawyer’s complete attention to review the paperwork. As in most cases, the plaintiff’s law firm is responsible for repaying the advance at the end of a successful lawsuit or settlement.
- Is it appropriate for you to attain pre-settlement funding?
This is one of the main questions asked by a plaintiff before getting a pre-settlement loan. In order to make a rational decision, you can consider the following points:
- Case Duration
You can discuss with your lawyer about the duration of your case as to how long it will take to get a final verdict from the court.
- Feasibility of Other Loan Options
With the help of your attorney you can go through the other options available to cover your general expenses. These options include getting a personal loan and credit card. You can also borrow some money from your friends or relatives.
Due to any reason, if you think that these options are not viable for your current situation then must go for a pre-settlement loan from a reputable funding company.
- Interest Rate
It is to be kept in mind that all funding companies charge different interest rates i.e. some charge as much as 50% while others charge as low as 1 to 3%. Besides that there are some lawsuit loan companies that are not reliable.
After the careful analyses of above stated factors, you would be in a better position to decide whether a pre-settlement funding will be a right choice for you or not?
