If you are actively involved in a personal injury lawsuit, you may have heard the term pre-settlement funding. Along with all the other legal jargon, you may not know what it means or how it could potentially benefit you.
Florida pre-settlement funding, sometimes called a lawsuit loan, is more like a cash advance that plaintiffs can get during a pending personal injury case. When money is tight as you await your compensation for your injuries and damages, you may consider a traditional loan from the bank. However, those types of loans are recourse loans, and pre-settlement funding in Florida is non-recourse, meaning you don’t pay it back unless your case settles or has a winning verdict.
The funding companies advance you this money in exchange for part of your future compensation award. You won’t have to make monthly payments on a loan or struggle to feed your family and pay your bills. Essentially, it creates a win-win situation for injured parties in personal injury lawsuits.
By giving you some of your money right now, you get the financial relief you need for daily expenses and medical bills. This allows your attorney to have more time to negotiate for what you truly deserve rather than feel the pressure to settle for less to get you compensation.
How Does Pre-Settlement Funding Work in Florida?
Pre-settlement funding is quite simple. If you are the plaintiff in a personal injury lawsuit, you can apply to a Florida pre-settlement funding company. On the application, it will ask for details about your case, including your attorney’s information.
Once you submit your application, the pre-settlement funding company will evaluate your case along with your attorney. They will be looking to see if your case is worth the risk based on the strength of your case strategy and the estimated value of your compensation award.
One thing that makes it stand out from traditional loans is that you do not need to have good credit to qualify. Your approval will be based on the merits of your case rather than your credit score. When you receive approval, you’ll only have to wait between 24 and 48 hours to get your money, which is typically a percentage ranging between 10% and 20% of your estimated settlement.
After the settlement or verdict is issued, your attorney repays the funding company directly from your compensation award. Legal fees will also be deducted, and then you’ll receive the remainder of your settlement funds. If you don’t win your case, you don’t have to pay back the funding company.
What Can You Use Pre-Settlement Funding For?
If you are approved for pre-settlement funding in Florida, you can use it in a variety of ways. This cash advance will make it possible for you to pay your monthly bills, such as your rent, or mortgage payment and utilities. You can also use it to buy groceries and household goods for your family.
Some people use their pre-settlement funds to pay for their medical bills or compensate for their lost income while they are unable to work as they recover from their injuries. Others use it to pay off debts to keep interest from further accumulating. Ultimately, what you spend it on is up to you, though it is best to be prudent and use this money as a way to support you until your case concludes.
Am I Eligible for Florida Pre-Settlement Funding?
While you don’t need to have your credit record scrutinized, you do need to have certain criteria to be eligible for this type of cash advance. In Florida, you must:
- Have an active personal injury lawsuit
- Have significant injuries that are directly caused by the at-fault party
- Be represented by a personal injury attorney who collects their fees on a contingency fee basis
- Be a Florida resident or have a lawsuit pending in Florida
What Are the Advantages and Disadvantages of Using Pre-Settlement Funding?
Pre-settlement funding in Florida offers excellent benefits to those who have suffered injuries at the negligent hands of others. You’ll get access to immediate cash to alleviate the burden from your medical bills, daily expenses, and other debts.
It’s also a no-risk option since the funding is non-recourse. If you lose your case, you will not owe anything. By easing your financial burdens, you won’t feel the pressure to accept a fast, lowball settlement. Your attorney can then continue to negotiate until you get a fair offer.
For many, a traditional loan is out of the question, as their credit record is tarnished, plus the need to repay it no matter what will always loom on the horizon. Pre-settlement funding doesn’t require credit checks, nor does it require you to repay it if you lose. If you win, the advanced amount is paid back by deducting it from the compensation award provided when your case concludes.
While pre-settlement funding can be beneficial for those thrust into a tight spot after an accident, it does have some drawbacks. The fees and interest rates should be clearly understood before you sign for this type of funding. It may still be advantageous in your situation, but you should be fully aware of what is expected of you from the pre-settlement funding company.
Your fees and interest will be deducted from the final award in the case, and that will reduce the total amount of money you’ll receive. However, making this arrangement could be in your best interest, depending on your current financials. It’s also still a debt, even though it’s not a personal loan, and it will be repaid from your settlement. Some find this a benefit since they don’t have to think about making monthly payments once their case provides their compensation at the end.
How Do I Know If Pre-Settlement Funding Is Right for Me?
Everyone has different circumstances, and for some, pre-settlement funding is the perfect choice to help them through tough times. If you currently have a lawsuit filed, then you should speak to your personal injury attorney to determine if this funding makes sense for you.
