What Is Pre-Settlement Funding and Why It’s Important for Your Litigation?

Pre-Settlement Funding

When you are in litigation, you will likely require some form of financial assistance. While this is not an uncommon occurrence, many people have no idea what pre-settlement funding is. If you are one of the people who has never heard of pre-settlement funding, then this blog post is for you.

In general, if a person requires money to meet expenses related to their civil lawsuit, they can get pre-settlement funding to help pay for costs before they are awarded damages or if they are awarded damages but not immediately. But what does this mean? Pre-settlement funding means that an individual will receive money upfront before the settlement. This money helps cover some of the expenses involved with litigation while waiting for a settlement or court verdicts. The individual will then repay the funds after receiving their settlement payout.

What is Pre-Settlement Funding?

Pre-settlement funding, also known as presettlement funding, is a financial service that helps pay for the expenses of a lawsuit before it is settled. In general, if a person is involved in a civil case and needs money to meet those expenses, they can get pre-settlement funding to help cover those costs. However, what does this mean?

In short, pre-settlement funding means that an individual will receive money upfront before the settlement is given. This money helps cover some of the expenses involved with litigation while waiting for a settlement or court verdicts. The individual then repays the funds after receiving their settlement payout.

Why is it essential for your litigation?

Pre-settlement funding is essential for your litigation because it can be a way to cover some of your expenses before you are awarded damages. If you go without pre-settlement funding and lose, you will not receive any money and will have to pay for all the fees associated with your case. What’s more, if there is a delay in receiving your settlement and you need financial assistance, pre-settlement funding may be an option if you do not have other sources of income.

Types of Pre-Settlement Funding

There are two types of pre-settlement funding: out-of-pocket expenses and litigation costs. Out-of-pocket expenses are used to help pay for the person’s living expenses while they wait for a settlement or court verdicts. These funds can be used to cover any debt they may have acquired during this time. Litigation costs are money upfront given to a person as a down payment on their settlement award. This money can be used as a down payment on costs such as filing fees, expert witness fees, and more.

The type of pre-settlement funding you apply for will depend on your individual needs and the requirements of your case. For example, if you want to pay off debt or need a down payment for your settlement award, you would apply for out-of-pocket expenses funding. If you need funds upfront to pay litigation costs, you will use litigation costs funding.

Litigation Loans

What You Need to Know

The type of funding that an individual will receive is dependent on what they need it for. For example, if the person needs to pay for legal fees and court fees, their lender might provide them with a litigation loan. However, if the individual needs money to cover basic expenses like food and shelter while waiting for their settlement or verdict, they might receive an interest-free pre-settlement loan.

Litigation Loans – The Negative Aspects

The main downside to litigation loans is that they are expensive. If the individual cannot repay the loan after receiving their settlement, they can face high-interest rates or even legal consequences. Additionally, if an individual has a low income, then it may be difficult for them to afford the monthly payments, leading to more financial issues for them.

Conclusion

Pre-settlement funding is a type of financing for your lawsuit. It’s usually the last resort, but it can be an opportunity for you to avoid paying expensive litigation fees out-of-pocket.

There are two types of funding: litigation loans and litigation lines of credit. Your best pre-settlement financing option will depend on your case’s specific needs.

If you’re considering taking out a pre-settlement loan, it’s essential to know some drawbacks. For example, you might not be able to use the money for anything other than your legal fees, and you’ll have to pay interest on the loan.

But if you haven’t received the settlement money yet or need income because you can’t work, pre-settlement funding might be the right choice for you.