Can I Get Pre-settlement Funding for a Case That Has Settled?
by Toni Hipolito
If you’ve been injured and are navigating the legal system, the idea of pre-settlement funding might seem like a lifeline. Pre-settlement funding, often referred to as lawsuit loans or lawsuit cash advances, can provide much-needed financial relief while your case is still ongoing. However, once your case has reached a settlement, pre-settlement funding is typically no longer available. Let’s explore why that is and what options remain for plaintiffs after their cases are settled.
What Is Pre-Settlement Funding?
Pre-settlement funding is a financial arrangement that allows plaintiffs to receive an advance on their expected settlement while their case is still in litigation. This funding is typically provided by specialized companies, like Trauma Cash, that assess the merits of the case and offer a portion of the expected settlement amount. If the case is successful, the funding company receives a predetermined percentage of the settlement as repayment.
This type of funding can be a lifesaver for plaintiffs who are struggling to cover medical bills, rent, or other expenses while waiting for a resolution in their case. However, once a case reaches a settlement, pre-settlement funding becomes unavailable. Here’s why.
Why Pre-Settlement Funding Isn’t Available for Settled Cases
Pre-settlement funding is based on the uncertainty of an ongoing case. Funding companies assess the strength of a plaintiff’s case and advance a portion of the expected settlement amount, with the expectation that they’ll receive a return if the case is successful. The key factor here is the potential of the case, which is present only while litigation is still active.
Once a case has been settled, the terms of the settlement are finalized, and the plaintiff receives the agreed-upon amount. At this point, there is no longer a potential future settlement that can guarantee repayment to the funding provider. Since the case is already resolved, there’s no “return on investment” for the funding company, which is why they typically don’t offer pre-settlement funding for settled cases.
How Pre-Settlement Funding Works: A Quick Overview
To better understand why pre-settlement funding is unavailable for settled cases, let’s break down how it works:
- Application: Plaintiffs seeking legal funding apply with a lawsuit funding company, like Trauma Cash, by providing case details.
- Evaluation: The funding provider reviews the merits of the case, evaluating its strength and likelihood of a successful outcome.
- Offer: If the case is eligible, the funding company offers an advance based on the expected settlement amount.
- Acceptance: If the plaintiff agrees to the terms, they sign a contract, and the funds are disbursed.
Risks of Pre-Settlement Funding
While pre-settlement funding can provide immediate relief, it’s important to understand the potential risks:
- Repayment Obligation: If your case is unsuccessful, you might still be required to repay the advance.
- High Fees and Interest: Pre-settlement funding can come with higher interest rates and fees compared to traditional loans.
- Reduced Final Settlement: The advance amount is deducted from your final settlement, which may reduce the overall amount you receive.
Options for Plaintiffs After Settlement: Post-Settlement Funding
If your case has already settled and you need access to funds sooner, post-settlement funding may be a viable alternative. Post-settlement funding allows plaintiffs to receive an advance on the settled amount before the final check is issued. This can be particularly helpful when insurance or court processes delay the disbursement of funds.
Unlike pre-settlement funding, post-settlement funding is available because the settlement terms are already agreed upon. Legal funding companies offer these advances, ensuring that plaintiffs can access their funds quickly and with fewer obstacles.
Conclusion
Pre-settlement funding is an invaluable tool for plaintiffs still in the midst of litigation, offering financial relief while waiting for a resolution. However, once a case has been settled, pre-settlement funding is no longer an option due to the finality of the settlement terms.
For those who have reached a settlement but need immediate access to funds, post-settlement funding can offer a similar solution. At Trauma Cash, we understand the financial challenges that can arise during legal proceedings, and we’re here to help you explore your options and secure the financial support you need, whether your case is ongoing or settled.