If you are unlucky enough to be involved in a car accident, you are liable to face financial as well as physical damages.
Indeed, these damages can weigh heavily on your overall well being while also jeopardizing your financial health.
While you will be legally entitled to compensation for any injuries you sustain in an accident caused by someone else’s negligence, it takes months for personal injury cases to settle. In the worst outcome, you could even wait years for compensation. In the meantime, though, expenses continue to pile up.
Pre-settlement funding is one way of avoiding financial hardship in the short-term, but you may find that a single round of settlement funding is still not enough to pay your bills, especially if you find the settlement process starts dragging on.
This form of lawsuit funding does not make the right choice for everyone injured in an accident and expecting a settlement. For those with no savings fund and no other option, though, a lawsuit loan can be invaluable.
Potential Problems Before Receiving a Personal Injury Settlement
The purpose of a personal injury settlement is to help you get back on your feet after an accident, both physically and financially.
Unfortunately, it is not a simple case of presenting a claim to an insurance company and receiving a compensation check. In most cases, you’ll need to fight the insurer to get a fair and reasonable settlement. This can take months or even years, but you should find most insurance companies will eventually offer a fair settlement rather than going to trial.
In the meanwhile, you’ll continue to face all your routine everyday expenses, but you will also likely have new financial obligations. Medical expenses in the aftermath of a car accident often cause significant financial hardship.
At the same time, you may find your income is impacted. You are likely to need time off work if you are injured and this may affect your wages.
If you have no emergency fund, no chance of help from friends or family, and you simply can’t stay afloat, a lawsuit loan can be a lifesaver.
Why should you consider pre-settlement funding, then?
When Is Settlement Funding Beneficial?
With pre-settlement funding, you get access to part of your money early.
If you have a strong personal injury case and you are represented by an attorney, many legal funding companies offer non-recourse lawsuit loans. They advance you a sum of cash now in exchange for a portion of your expected settlement. If you lose your case, you repay nothing.
The primary advantage of settlement funding is the rapid delivery of funds. Assuming your case is strong, and you have retained a responsive lawyer, you could have a cash advance anywhere from a day to a week.
The non-recourse nature of lawsuit loans also means you will be taking no risk at all. If you do not receive a settlement, you repay nothing.
Because this form of financing is risky for the lender, interest rates for lawsuit loans are often high. With interest compounding monthly and most personal injury cases taking some time to resolve, this can be a costly form of borrowing. Make sure you examine all angles before committing to a pre-settlement loan and look for a company that charges low, simple rates.
Is There a Limit to the Amount of Legal Funding Available?
There is no limit to the number of times you can apply for legal funding.
Many people take out multiple lawsuit loans to defray the escalating costs of their personal injury cases.
What Happens if I Have Previously Applied for Funding Elsewhere?
Each application will be assessed on its own merits. It doesn’t matter if you previously applied for pre-settlement funding with a different lender. Many lenders will even refinance loans from other providers.