Pre-settlement Funding, When You?re Waiting for a Verdict

Many people find themselves waiting months or years for a settlement regarding a court case. Many of these people have every expectation of receiving large sums of money in an eventual verdict or settlement, but court costs and the possible loss of work associated with their case has them strapped for cash in the meantime. Pre-settlement funding is the solution for this situation, but people should evaluate the pros and cons before signing up.

A pre-settlement funding company awards money to plaintiffs before the resolution of their case. Such a loan can help meet their needs while they wait for a settlement. These may include hospital costs, treatment, housing costs, daily needs, etc. Many plaintiffs in this situation find themselves unable to work. Or, if they can work, their income may be insufficient to sustain their legal costs. They may find themselves without the funds to proceed, even if they are reasonably sure that there will eventually be a ruling in their favor.

Pre-settlement funding can often tithe these individuals over for the years and months they need to resolve their case. Because of legal costs, many plaintiffs may be forced to accept an insufficient settlement, because they cannot afford to go on. A loan of this type can enable the plaintiff?s representation to continue, accepting only a just and reasonable settlement.

Lawsuit loans should not be pursued by everyone, however. Because of the high risk that a plaintiff will not be able to repay the loan, the loan issuer gives the loan at very high interest, sometimes monthly compounded, or for a guaranteed portion of the eventual settlement. Unless a plaintiff is reasonably certain that their case will be settled or ruled at a certain level of financial restitution, a lawsuit loan can find him or her stuck between a rock and a hard place.

Before seeking pre-settlement funding, discuss the option with your representation and, if possible, an independent financial advisor with no personal stake in your case. If there is no other way to pursue reparations in your case, if your case is strong, and if the amount you receive in funding combined with interest will not force you bankrupt, then a lawsuit loan may be just the option for you. If any of those issues find you unsure, then if may be best to investigate other options or avoid this type of funding entirely.

A less risky alternative to pre-settlement funding is post-settlement funding. If you have already been guaranteed a specific settlement, but find yourself financially unable to wait for it (sometimes these funds take months to process and find their way into your bank account), post-settlement funding can be just the thing you need. Because you have already been guaranteed a specific settlement, this option is not as fraught with peril for the plaintiff. The repayment works very much like the lawsuit loan, with high interest or a portion of the settlement price going to the lender. The only difference is, you know exactly how much money you have to work with.

Lawsuit loans are a risky financial product, but they may be necessary to you or someone you know one day. They are only worth it to people in specific situations so, if seeking one, evaluate your financial situation objectively, as well as the strength of your case. If you feel good about your situation, proceed with confidence.

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