If you’ve had an accident, you may be left with injuries so severe that they keep you from working. You’re far from alone: In January 2022, nearly eight million people missed work because of an injury, illness, or medical problem.
Car accidents are a common cause of such injuries. According to New York City police statistics, more than 2,050 drivers and 1,376 passengers suffered injuries in September 2023 alone.
If you’ve been hurt in a car crash or any other type of accident, pre-settlement lawsuit funding could be just what you need to tide you over when you can’t work. Below, learn about pre-settlement funding in New York and determine whether your case qualifies.
What Is Pre-Settlement Funding?
Pre-settlement funding is a type of cash advance that allows you to borrow against an expected settlement or award. It goes by a few other names, including:
- Litigation financing
- Lawsuit cash advance
- Legal funding
Pre-settlement funding comes from lending companies that offer relief to plaintiffs undergoing financial hardship. For instance, if you can’t work and are struggling to pay your mortgage, a lawsuit advance could cover your payments until you have a settlement or award.
Benefits of a Lawsuit Cash Advance
As mentioned above, the main benefit of a lawsuit cash advance is that it covers your expenses while waiting on a settlement or award. If you can’t afford to pay your bills, applying for pre-settlement funding can be a smart choice.
Pre-settlement funding can give you access to money long before your case settles. Many cases take months or even a full year to settle, but your bills certainly won’t stop during that time. You could have money in your pocket within 24 hours with a lawsuit cash advance.
Pre-settlement funding is similar to a personal loan in that it’s very flexible. You can spend the money on nearly anything, such as:
- Medical bills
- Utility bills
- Credit card debt
- Student loans
- Home care
As a bonus, a lawsuit cash advance can give your lawyer more time to negotiate a settlement. If you’re not worried about money, you won’t feel as pressured to accept a lowball settlement that doesn’t cover all your damages.
Neither do you need excellent credit to qualify for pre-settlement funding. Plus, unlike other types of loans, you won’t have to make monthly payments. Instead, you repay the advance in full once your case settles.
What if you lose your case or settle for less than you owe? If you lose, you typically won’t have to pay back your advance. And if your case settles for less than the advance, you usually don’t have to pay back the full amount borrowed. Of course, this depends on the lending company, so do your research before applying.
Drawbacks To Consider
Pre-settlement funding may sound perfect if your bills are piling up, but it does have a few drawbacks to consider before applying. These include:
- It can be tough to find a reputable lender
- Only certain cases qualify
You’ll also have to consider your fund’s advance fees. Depending on the company you pick, advance fees can range from 27% to 60% per year.
How Much Could You Qualify For?
If your case qualifies, a pre-settlement lawsuit funding company will generally give you 10% to 20% of the amount it expects you to win. For instance, if the lawsuit funding company thinks you’ll settle for $50,000, it might give you an advance of $10,000.
How To Qualify for Pre-Settlement Funding
Pre-settlement lawsuit funding is fairly easy to qualify for, but you must meet three requirements for approval.
You Have an Attorney
Most pre-settlement lawsuit funding companies will require you to have an attorney actively working on your case. The attorney must also work on contingency, which means they aren’t paid unless they win the case.
Meeting this requirement tells the funding company your attorney thinks you have a strong case and will likely win.
You Have a Valid Pending Lawsuit
This requirement ties into the one above. The pre-settlement lawsuit funding company will look at your medical records and court documentation to determine whether your case meets the criteria for a valid lawsuit. They’ll also ask for proof of an existing attorney-client relationship.
You Have an Eligible Case
Not all cases qualify for pre-settlement funding. Legal funding companies usually only provide funding for cases that are low in risk and tend to offer substantial payouts. Such cases may include:
- Car accidents
- Slip-and-fall accidents
- Medical malpractice
- Dog bites
- Sidewalk falls
- Construction accidents
- Premises liability cases
Repaying Your Cash Advance
Once you’ve won your case, your lawyer will repay the cash advance by sending a check to the lending company. This check includes the amount you owe, plus advance fees.
If you lose the case, you don’t have to repay the cash advance, but you may be on the hook for advance fees.
Learn Whether Your Case Qualifies for Pre-Settlement Funding
If you’re struggling to pay your bills after an accident, pre-settlement lawsuit funding can give you and your family some financial breathing room. To learn how litigation finance firms can help you, contact Apex Legal Funding, LLC, at (800) 377-4934.
Frequently Asked Questions
Is pre-settlement funding worth it?
Pre-settlement funding can be worth it if you have bills to pay and aren’t sure when your case will settle. Additionally, a pre-settlement fund can give your attorney more time to negotiate for a higher settlement.
Does lawsuit funding affect your credit score?
No, lawsuit funding doesn’t affect your credit score, as they do not show up on your credit report. Additionally, most lenders won’t check your credit when you apply, and they usually require no proof of employment.
How do you pay off pre-settlement lawsuit funding?
To pay off pre-settlement lawsuit funding, your attorney will send a check to the lender for the amount you owe, plus advance fees. This amount comes out of your settlement or award, which means you only have to pay off the fund once your case settles.