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What Is Settlement Funding? 

Settlement funding is a form of financing where the plaintiff in a civil lawsuit takes out a loan against the expected settlement award. Unlike a traditional loan that you can take out at any time and secure through your personal property (such as a home or vehicle), settlement funding is only available while your case is pending because it is paid from settlement funds in the civil case.

When Should You Turn to Settlement Funding?

Financing of any kind always involves some amount of risk (for example, what happens if you can’t repay the loan), so it’s always important to ensure you look at all options. Turning to family and friends, government assistance, and traditional short-term loans are options we encourage clients to pursue before considering a settlement loan. 

If you have exhausted other options for financial assistance, you should consider settlement funding if, 

  • You were injured due to someone else’s fault

  • You have hired a lawyer and are suing the responsible party

  • You need assistance covering living or medical expenses while your case is pending

Typical cases that qualify for settlement funding include, 

  • Personal injury cases (where you were injured due to someone else’s carelessness or negligence)

  • Motor vehicle accidents

  • Workplace/work-related accidents

  • Medical malpractice

  • Product liability that resulted in injury

  • Premises liability (for example, you were injured due to an accident or incident in a store)

  • Wrongful death (carelessness or negligence caused the death of a loved one)

Uses for Settlement Funding

People who seek settlement funding are those who have exceptional needs while waiting for their case judgment. Typically they have high medical bills due to injury or an accident. In some cases, they may be unable to work or unable to work as much as usual, so need assistance with day-to-day expenses. 

How Does Settlement Funding Work?

You’ve exhausted avenues to meet your financial needs and you have the type of case that usually qualifies for settlement funding. Now what? 

Once you contact us about your funding needs, we request information about you and your case, including your attorney and their contact information. We work with your attorney to assess, 

  • The merits of your case

  • Chances of resolution in your favor

  • The amount your attorney estimates the court will award you upon resolution

Settlement funding presents clients with a unique risk – you may not be able to prevail in through settlement or trial. Even if you do prevail, your compensation may be less than expected. Because of these unique risks – both for us as lenders and you as the client – we consider cases carefully and approve applications based on their chance of success. 

If we approve you for settlement financing, you’ll be responsible for paying the amount of your loan plus fees and charges that we will discuss with you before you receive your funds. 

How Are Settlement Loans Paid?

Repayment for a settlement funding differs from other types of loans in that you don’t make monthly payments or pay upfront costs. Instead, when your case is found in your favor and award settlements are reached, your loan and associated fees are deducted after your court costs and attorney fees. After those costs are taken out of your award settlement, you’ll receive the remaining funds from your case. 

What If You Don’t Win Your Case or the Award Is Less than Settlement Funding?

Each case is unique, including the outcome if things don’t turn out as you hoped. The case may not be found in your favor, or you may win the case but the awarded judgment is less than expected. In either case, are you liable to repay your settlement funding? 

The answer is … it depends. When we evaluate your case and work with your attorney, we will structure a settlement funding agreement based on the merits of your case and the anticipated award. Before you sign your agreement, review with your attorney how much you will receive, and the fees and charges involved. The agreement will also include your liability (if any) if the case is not found in your favor, or you receive a lower-than-expected judgment.

The Benefits of Settlement Funding

For those who find themselves in financial need after an accident or injury, settlement funding offers a number of benefits. 

  • Get the money you need for living expenses. Following an accident or injury, you can find yourself facing financial hardships for a number of reasons. From the inability to work to medical bills, the unexpected expenses can add up, so having the money you need to cover those bills and meet day-to-day expenses is important. 

  • Settlement funding doesn’t rely on your credit rating. Because we look at the merits of your case, we don’t look at your credit score to determine whether or not you’ll receive settlement funding. That means if you have poor credit or no credit, you don’t have to worry about your funding being denied because of that. 

  • You usually get your funds quickly. Personal loans and lines of credit typically involve an approval process that includes reviewing your financial information and credit. It can take time. With settlement funding, you can receive funding within only a few days, as long as your application is complete and we’re able to contact your attorney. 

  • Settlement funding removes pressure and gives you the time you need to fight your case. Cases can take years to resolve, and companies will use financial hardship to obtain a settlement from plaintiffs that are more favorable to them. Settlement funding eases the financial stress to ensure you and your attorney can pursue your case and negotiate the best settlement for you.

Additional Considerations for Settlement Funding

Settlement funding offers plaintiffs a number of benefits. However, it is a huge financial decision you should consider very carefully. Before you decide to go through with settlement funding with us, consider, 

  • How much do you anticipate receiving in judgment if you win your case? Remember, your attorney’s fees and other court costs will be deducted from your judgment before your settlement funding, so carefully weigh what you need and expect to receive. 

  • Court cases can take years to resolve. Carefully consider things like interest charges that can accrue for your settlement funding and consider the rates you can afford to pay. 

  • Consider the types of settlement funding available to you and how each differs:

    • Purchase Agreements - you receive cash funds now and the amount is deducted from the proceeds of your judgment.

    • Settlement Loans - similar to a purchase agreement, the cash funds you receive are deducted from your judgment. However, if the case is not found in your favor, you may be responsible for paying the amount of your loan. 

    • Spring Forward Agreements - you sell some or all of the expected proceeds of your judgment for a specific amount you receive immediately. Whatever portion you sell goes to the funding company once the judgment

Do You Need Settlement Funding? 

If you’ve been injured due to an accident or someone else’s negligence or carelessness, financial stress can complicate your recovery and create hardships for you and your family. As you move forward in your civil suit, reach out to us to discuss your financial needs and funding options. We will work with you and your attorney to ensure you receive the support you need. 

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