There are many important life events you may not be able to handle without proper funding, which is why it’s important to have a plan for the future before something happens. Pre-settlement funding is designed for just that: Ensuring you’re prepared for whatever life might throw your way. Here’s all you need to know about Pre-Settlement Funding:
What is Pre-Settlement Funding?
Pre-Settlement Funding is the transfer of funds from a lending institution to a personal injury plaintiff before the resolution of their injury claim. If your case is successful, you receive the amount of pre-settlement funding back at settlement or verdict, plus any additional money you will be entitled to. If your case is unsuccessful, you are responsible for repaying the funds at a rate determined by the pre-settlement funding company.
Is Pre-Settlement Funding Right for You?
Generally, pre-settlement funding is recommended for those who have been injured and are seeking compensation but feel they won’t be able to handle the costs of their injury until their claim is resolved. Often, these individuals have been through a series of treatments and have run out of money, putting their quality of life at risk. Pre-settlement funding can help.
Are There Any Conditions to Pre-Settlement Funding?
The pre-settlement funding agreement is written by the lending institution and is dependent on the amount you will receive a settlement or the amount awarded in your case. Generally, the terms of the agreement are that you must repay the funds in a timely fashion, monthly, for a set time frame. If you are unable to meet the monthly payments, you have the option of updating the agreement and resuming the direct deposit of funds.
How do Pre-Settlement Funding Companies work?
Each Pre-Settlement Funding Company’s program is different from the next. However, most of them work similarly. Each one will offer pre-settlement funding based on your projected settlement. The monies will be placed in a trust account, which you cannot access before resolving your case. In most cases, these funds are available for you to use for living expenses such as rent or mortgage payments or to pay for medical fees and everyday necessities. If the case is successful, you will be offered a lump sum at settlement. This means that, in most cases, you do not have to pay for the trust account. If your case is unsuccessful, you are responsible for repaying the borrowed amount via direct deposit. In most cases, pre-settlement loans range from $5,000 to $100,000. Depending on your projected settlement or award in court, a portion of that money will repay your pre-settlement funding. When the case is over, and the entire amount is paid, you will be reimbursed for the remaining funds on deposit. Depending on the pre-settlement funding company, you can be reimbursed in a lump sum or over a while. Most pre-settlement funding companies offer their services for shorter terms; usually five years.
What are the Advantages of Pre-Settlement Funding?
Unfortunately, not everyone realizes that they may need pre-settlement funding until it’s too late. However, with a little planning and foresight, you can save yourself a lot of hassle and heartache. Stated, you will not have to worry about your financial situation before something happens to you. If you can cover living expenses with no problem until your case is over, then you’re good to go. You won’t have to worry about zoning out at the doctor or ruining a car payment because of your injury. You won’t have to wonder if you’ll be able to keep your apartment or save for your child’s college education.
What are the Disadvantages of Pre-Settlement Funding?
Like any other investment, Pre-Settlement Funding comes with risks and rewards. Although the risks are low, most people will not be approved for a loan. If your case is lost or settled for an amount less than what you received in funding, you are responsible for repaying the borrowed funds. In addition, you need to be aware that there is a chance the funding company will lose money on your case and may not be able to pay you back.
Pre-settlement funding can be a great way for you to manage the costs of your case. Everyone should have a plan for their finances before something happens, and if you’re not sure you have enough money to deal with an unexpected financial situation, this might be the answer. Although there are risks and costs, it can be a safe and reliable way to get the financial security you need.