When you’re waiting for a settlement to come through and you’re struggling to make ends meet, pre-settlement funding may seem like the lifeline you’ve been waiting for someone to throw you. However, before you sign any agreement, you need to do your homework. Like anything else in life, pre-settlement funding has its pros and cons.
The Pros
These are the reasons you may want to consider pre-settlement funding.
You Can Make Ends Meet
After your accident, you may have had to stop working for a while. Chances are you will have trouble paying your bills. If you can come to an agreement on a settlement, your financial troubles will be over, but this takes time. You need money now, and you can get it right away with pre-settlement funding.
Once you are approved for pre-settlement funding, you can wait patiently for your case to come to an end. Then, you will be able to do anything that you like with the money. You could pay your credit card bills or even go away for the weekend so you can destress.
You Can Wait for a Larger Settlement.
Insurance companies are notorious for delaying the negotiation process because they hope that you will do anything to bring it to an end. When they do this, they offer you the smallest amount of money they possibly can.
If you obtain a pre-settlement advance, you will be able to wait for the insurance company to offer you a fair settlement. If you wait until your trial ends, the jury may award you a much larger settlement than you could receive through negotiations. You will be able to use the extra money to pay any fees that you may need to pay the pre-settlement funding company.
You Will Have an Income Source.
If you have been injured so badly that you don’t know when you will be able to return to work, pre-settlement funding provides you with an income source. There may not be any other way for you to earn a living, but pre-settlement funding will make it so that you can keep up with your bills and even live the lifestyle that you are accustomed to living.
The Cons
These are the reasons you may want to steer clear of this option.
You Will Only Receive a Portion of the Settlement Amount
With pre-settlement funding, you cannot be approved to receive the entire amount that you would have received if you had waited for the jury award or the settlement. The amount that a pre-settlement funding company will be able to give you will depend on the amount that you can expect from the jury, but a pre-settlement funding company will only be able to offer you 15% to 20% of your expected award.
The Government Doesn’t Regulate Pre-Settlement Funding Companies
As a rule, pre-settlement funding companies are not regulated, but there are a few exceptions. If you live in a state where pre-settlement funding is regulated, it will be regulated in the same way that traditional lenders are regulated. These companies cannot charge you excessive fees, and they must disclose all of their policies. If you aren’t living in one of these states, make sure that you research the company very carefully.
Everyone Doesn’t Receive Approval
The pre-settlement funding company will decide whether or not to grant you the money that you need based on the amount of money that you can expect to obtain after a lawsuit or settlement negotiations. The cases that pre-settlement funding companies approve tend to be cases where the plaintiff has been definitively determined to be at fault for the accident. The defendant’s injuries must be equally clear as well.
Before you look for pre-settlement funding, make sure the pros outweigh the cons. If so, feel free to research pre-settlement funding companies so you can find one to offer you the funds you need. A legal funding company can help you pay your bills and give your lawyer time needed to properly handle the case, so make sure that you find the best company today.
