One of the main goals of pursuing a personal injury case is to seek financial compensation for your injuries. But in the meantime, your medical bills and related expenses continue piling up. Some plaintiffs seek pre-settlement funding to bridge financial gaps while they await their expected settlements.
Understanding your rights and legal protections for pre-settlement funding in New York can help you determine whether this type of funding is right for you.
What Is Pre-Settlement Funding?
Pre-settlement funding is a type of financing that would provide an advance on a portion of your eventual lawsuit settlement. Approved applicants generally receive between 10% and 20% of the estimated value of their potential settlements through this type of advance.
Pre-settlement funding can help you afford the expenses you are currently facing from your personal injury accident without incurring debt, late payment fees, or other potential penalties for non-payments. You do not need to provide any collateral or up-front payments to secure funding. Instead, the lending company will take the value of your advance, plus interest, out of your eventual settlement to pay back the loan.
Understanding Your Rights to Pre-Settlement Funding in New York
Lawsuit loans are provided by private lenders, not the court system. As a result, virtually anyone has the legal right to seek this type of financial assistance if they want to. You generally do not need to receive permission or approval from the court to apply for a settlement cash advance.
These lenders generally require borrowers to meet a few criteria before they can qualify for a pre-settlement advance.
- Be 18 or older
- Be a resident of the state you are applying in
- Have a qualifying personal injury case
The funding company will review the details of your case to determine whether you qualify for funding. They will assess the strength of your case, the value of damages, the expected length of the case, and more. They may speak directly with your attorney to gather this information and review court documents related to your case.
If you are approved for legal funding, you can often receive the advance within a matter of days. The funding company will detail the terms of the loan, including the interest rate and how you will repay the lump sum out of your settlement.
As a plaintiff in a personal injury case, you generally have the right to:
- Apply for litigation funding through a private lender, with or without the assistance of an attorney
- Accept a pre-settlement loan through a funding company
- Use your funds however you see fit
- Reject a pre-settlement loan offer
- Provide court documents to the lending company, as long as they are not confidential
Meanwhile, lending companies have a legal responsibility to clearly detail the terms of the loan and not charge prepayment penalties. They are also prohibited from influencing settlement decisions.
What Can You Legally Use Pre-Settlement Funding For?
Many lawsuit funding companies in New York do not place restrictions on how borrowers can use their pre-settlement advances. Once you receive these funds, you generally have the freedom to use them however you would like to.
You can use your advance to pay down costs associated with your accident, such as medical bills or rehabilitation equipment costs. You can also use it to pay for everyday expenses that you may now have trouble affording due to extended time off work or prioritizing other expenses.
Some borrowers even use these advances to pay for vacations or fun activities with family. Personal injury lawsuits can be stressful, and paying for an enjoyable activity may be a wise use of your advance.
What If You Lose Your Case?
Many types of pre-settlement funding are non-recourse. This means that if you were to lose your personal injury case or not receive a settlement, you would not be responsible for repaying the borrowed amount.
These funding companies provide funds on the assumption that plaintiffs will win their cases. This is why they spend time assessing the strength of your case before offering you funding. They also know that approximately 95% of personal injury lawsuits end in a pre-trial settlement, and they factor this into the estimated value of the payout.
If the lending company deems your case strong enough to provide you with funding, it will assume the risk of you losing the case or not walking away with a settlement.
Learn More About Pre-Settlement Funding From Apex Legal Funding, LLC
As many as 400,000 personal injury claims are filed each year across the U.S., according to the Department of Justice.
As a plaintiff in a New York personal injury case, you generally have the right to apply for pre-settlement funding. The numerous benefits of pre-settlement lawsuit funding make this a worthwhile consideration for plaintiffs facing financial difficulties.
Apex Legal Funding, LLC, offers pre-settlement funding and other financial solutions to plaintiffs in personal injury cases. Apply now to learn whether you qualify, or call (800) 377-4934 to learn more.
Frequently Asked Questions
What is the average personal injury settlement worth?
One survey of personal injury plaintiffs found that the average payout was approximately $52,900, but the value of your case can vary significantly based on a range of factors. Seeking pre-settlement funding could provide you with an advance on your settlement amount to start paying down expenses.
Can anyone apply for pre-settlement funding?
Anyone can apply for pre-settlement funding, but lenders often require applicants to meet certain criteria, such as being 18 or older and having a valid personal injury case.
Is pre-settlement funding protected by law?
Pre-settlement funding is subject to the terms in New York Senate Bill S1104A and other relevant laws. Funding companies generally must provide clear terms, are prohibited from penalizing prepayment, and must offer a 10-day cooling-off period where borrowers can cancel the funding agreement without penalty. However, these restrictions can vary.
How long does pre-settlement funding take?
Pre-settlement funding can take as little as 24 hours to hit your account after your application is approved. Funding companies often deliver advances quickly because they know borrowers are in tight financial situations when they apply.