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What is Pre-Settlement Funding?

— December 9, 2022

If you are successful in your suit, you can use the money from the settlement to pay off the funding costs.

Many people find themselves in the situation of needing money before their lawsuit is over. It can be because they need more money to continue the case or use the funds for other purposes.

Others may receive a letter informing them that a debt collector has purchased a judgment, and if they do not pay it, the decision will affect their credit. In these situations, waiting for the lawsuit to settle through the court can be long, slow, and expensive. Many people seek certain funds to get money before their case ends.

Pre-Settlement Funding

Pre-settlement legal funding is a source of collateralized, guaranteed financing that replaces or supplements the funds you would ordinarily have access to during litigation.

Plaintiffs use it in civil lawsuits to pay ordinary and necessary expenses during litigation, such as expert witness fees, deposition costs, and other legal expenses while awaiting the outcome of their lawsuit.

The pre-settlement legal funding market is a new way to finance your case. It finally allows anyone facing litigation to access working capital without jeopardizing the outcome or value of their case. There are no hidden fees for the funding and no obligations. You can keep control over your own money, whether in a settlement or after court proceedings are concluded.

Where Can I Go to Get Pre-Settlement Funding?

The pre-settlement industry is open to anyone. However, it is best to seek out a funding company that has received the latest legal guidance, licensing, and compliance information. It will ensure that they will respect all requirements of various state attorneys. Anyone using or wanting to sue to obtain a judgment or money could be eligible.

For legal reasons, payments are only made after a lawsuit is resolved. It excludes cases or circumstances where pre-settlement is inappropriate, such as bankruptcy cases and situations involving minors or missing persons.

Chicago Area Hospital Loses Funding After Investigation
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The Funding Process

The process of obtaining this funding is similar to that of a traditional loan transaction. However, it differs because the budget is only available to plaintiffs who are currently suing or will be suing shortly. The funds for litigation costs can range from $10,000 to 10 million dollars. The funding is tied to the outcome of the case.

If the plaintiffs are victorious, the settlement or judgment is used to pay back their lenders. Pre-settlement generally comes at a high-interest rate, but these cases tend to settle quickly.

What Are the Advantages of Legal Funding?

Pre-settlement funding can offer you the financial support you need to pursue justice. If you are not sure if this is the best path for you, consider the following advantages and consult an expert.

1. Get Working Capital Without Devaluing the Case

Pre-settlement funds provide clients with access to cash before their lawsuit is resolved. It means there will be less pressure to give up pursuing compensation. The terms of a settlement are often more favorable when the plaintiff is not in financial distress.

2. Improve Your Chances of Success

It allows you to invest in your case and litigate aggressively, increasing your chances of success. You can then use a favorable settlement to pay the costs of pre-settlement funds and other post-settlement fees.

3. Increase the Settlement Values

It improves the chances of getting a more favorable settlement if you succeed in your suit. The higher the settlement value, the more money you can recoup with funding.

4. Use The Settlement to Pay for the Costs

If you are successful in your suit, you can use the money from the settlement to pay off the funding costs. After all settlement costs are calculated, it will leave you with an overall profit.

5. Reduce Stress & Pressure From Legal Battles

When the clients have a bank account flush with cash, there is less stress about the legal battles they are fighting against creditors and debt collectors. If you lose your case, you can use the money to continue with plan B.

Legal Funding Might Be the Answer

Pre-settlement funding has become a popular option for plaintiffs who need money to pay off their creditors and debt collectors. By giving them immediate access to cash, they can focus on the essential part of the case–winning.

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