How To Choose the Right Pre-Settlement Lawsuit Funding Company in New York

According to New York State, over 155,000 people sustain injuries that require hospitalization annually. Serious accidents can cause physical pain, emotional stress, and financial hardship. Whether you’ve been involved in a car crash, a slip and fall, or medical malpractice, you may face mounting medical bills and lost income.

Thankfully, personal injury lawsuits provide a potential avenue for you to recoup some of your expenses. But how do you survive financially while waiting for the resolution of your case? The answer for many people is pre-settlement lawsuit funding.

If you’re seeking pre-settlement funding in New York, keep reading for more information on how the process works and choosing the right lending company. 

How Does Pre-Settlement Funding Work?

Pre-settlement funding allows you to borrow against the settlement or award you expect to win in your lawsuit. The lender may charge you a flat fee or a percentage (usually 2.99%-3.5% per month) of the expected compensation. According to the Bureau of Justice Statistics, you could qualify for $3,100 to $6,200 of the average personal injury settlement of $31,000.

Potentially strong and valuable claims may merit larger settlement advances. While such high-dollar cases are less common, New York City paid $9 million in a medical malpractice settlement in 2022.

When making approval decisions, a legal financing company will evaluate the merits of your case, including the following:

  • Amount and type of damages, such as lost wages, medical bills, and pain and suffering
  • Your liability for the accident, if any
  • Upper limits on insurance coverage

Why Should I Choose Pre-Settlement Funding Over a Bank Loan?

Pre-settlement funding differs from traditional bank loans in the following ways:

  • Lawsuit cash advances allow you to borrow against your potential case award. Typical bank loans require you to pledge your existing assets as collateral. 
  • Rather than qualifying you based on a credit score, pre-settlement lenders consider the likelihood of winning your case and its potential value.
  • Unlike conventional bank loans, lawsuit financing companies don’t typically require a credit check or proof of employment. 
  • Most pre-settlement funding doesn’t require monthly payments, while traditional loans do.
  • Litigation finance companies offer non-recourse loans, so you don’t owe them anything if you lose your case. This differs significantly from a bank loan, in which the lender can access your car, your home, or other assets if you default.

5 Questions To Ask Your Pre-Settlement Funding Company 

You’ll want to ask the following questions when looking for the right lawsuit funding company:

1. Do you charge interest or a flat fee?

Some legal lending companies charge a flat fee for cash advances, while others charge interest as a percentage of the funding amount. If the company you choose charges interest, ensure it is typically 2.99% to 3.5% monthly. Steer clear of lenders charging exorbitant rates.

2. What rate and terms apply in my case?

Understand the exact rates, terms, and conditions before signing any contract. The company should clearly state its fees, interest rates, and funding process. Their contracts should be easy to understand, and their representatives should answer any questions you may have.

The honesty, clarity, and responsiveness of their communication indicate the quality of the lender. This can help you avoid companies that have hidden fees or offer things they can’t deliver. 

3. Are there any out-of-pocket costs? 

Choose a company that does not require you to pay any upfront or other out-of-pocket fees. If a lender charges to process your application, look elsewhere for funding.

4. How quickly will I receive the funds?

Look for companies that can process your application and distribute funds quickly. Some legal funding companies can pay within 24 hours of approving your application. But since payout speed isn’t the only consideration in choosing a litigation lender, look at other factors.

5. How closely will you work with my lawyer?

To qualify for a pre-settlement loan, you must have already hired an attorney and have filed a lawsuit. Reputable legal financing companies will always speak with your lawyer before agreeing to offer funding. Your attorney provides important information to help the lender understand the merits and value of your case. Avoid working with companies that offer to make decisions without consulting your lawyer.

5 Tips for Choosing the Right Pre-Settlement Lawsuit Funding Company in New York

Beyond the questions above, consider the following factors to select the right legal funding company:

  1. Reputation: Quality legal lenders have positive online reviews and a good standing in the industry. They should also be able to provide you with references or testimonials from previous clients.
  2. Experience: Companies with more years of experience know the ins and outs of the industry, offering you a smoother process and more reliable advice. Financial stability will also help ensure they can provide the funding you need.
  3. Professionalism: All customer service representatives should be friendly, respectful, helpful, and responsive. 
  4. Location: Many lawsuit lending companies require borrowers to live in-state. Choosing a local NY company also helps ensure your lender knows your jurisdiction’s relevant laws and legal procedures.
  5. Transparency: Seek out companies that are upfront about what they can offer, state their terms clearly, and have a simple application process.

Is Apex Legal Funding Right for You?

Apex Legal Funding offers various types of pre-settlement lawsuit funding for plaintiffs struggling to make ends meet. To determine whether you qualify for a 24-hour cash advance, call us today at 800-377-4934 for a free consultation. 

Frequently Asked Questions

Can I borrow money from a pending lawsuit?

Yes! You can receive a cash advance on your expected lawsuit award or settlement amount if you qualify for pre-settlement funding.

Are pre-settlement funding safe?

Pre-settlement, non-recourse loans from reputable lenders are safe because you don’t have to repay the funding if you lose your case. However, many cases take years to conclude, and many pre-settlement loans accrue interest, so ensure you understand the terms before committing. 

Do banks offer pre-settlement lawsuit funding?

Banks do not typically offer loans for pre-settlement lawsuit funding because of the risks involved in offering a loan with no collateral.