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7 Things You Need to Know About Pre-Settlement Funding

Pre Settlement Funding

If you are involved in a personal injury lawsuit, you may be wondering whether pre-settlement funding is good for you. This type of financing can provide you with the money you need to pay your bills and cover other expenses while your case is pending. However, there are several things you should know about it before you decide. We will discuss seven things to keep in mind when considering this option.

What is Pre-Settlement Funding?

Pre-settlement funding is a cash advance on the expected settlement proceeds of a pending lawsuit, sometimes called lawsuit funding. Suppose you’ve filed a lawsuit, and it is yet to be resolved. In that case, you could qualify for an immediate payout to help you cover related expenses such as medical bills or lost wages or to hire experts to help validate your injury claim. You can also use it for other litigation matters such as debt collection and real estate settlements.

How Pre-Settlement Funding Works

In a pre-settlement funding deal, you must assign your rights to the money from the lawsuit to the lender. This type of loan is available for pending cases with a high likelihood of success and a clear paper trail. To determine how much money you can receive, providers may consider various factors. Such factors include expected total settlement, your current financial condition, and the protection offered against any potential loss. Approval typically takes only a few hours after you’ve submitted all the documentation.

Benefits of Pre-Settlement Funding

There are several benefits to pre-settlement funding, probably the biggest of which is peace of mind. If you have been waiting for a long time to receive compensation, a cash advance can give you a hand up in a challenging situation. Additionally, suppose your injury has resulted in lost wages or medical bills. In that case, the money you receive from pre-settlement funding could help cover those expenses while you wait for the settlement to be finalized.

Risks of Pre-Settlement Funding

The first risk is that you could lose your case. Since pre-settlement funding providers often advance a significant portion of the total settlement amount, a loss would leave you on the hook. Paying back that money plus any fees and interest the provider charge for having advanced you could be challenging.

Another risk is that if you file a claim asking for more compensation than is due to you, any settlement funds may not be enough to repay the loan. This could leave you without coverage for further costs or damages.

How Much Money Can You Borrow?

Pre-settlement funding companies will look at your pending lawsuit to determine how much you can borrow. Typically, the minimum amount of money available is $15,000.00, but it can range upwards from there depending on your specific circumstances. These loans are usually for smaller amounts compared to other types of litigation funding.

Process of Getting a Pre-Settlement Loan

The first step is to complete an application. Most pre-settlement funding providers will have their own unique set of questions they ask in the form. You must answer all of them accurately or risk not proceeding with your application. Once you submit, you should hear back from a representative within hours on whether or not your application has been approved. In most cases, providers pay out pre-settlement loans within 24 hours of the approval date. The time frame for receiving your money can vary depending on how quickly you submit your documents and paperwork.

When Should You Get a Pre-Settlement Loan?

Typically, you should get pre-settlement funding as soon as possible after you’ve filed the lawsuit. Remember, this type of loan is only available for pending cases that are likely to succeed with plenty of documentation to back it up.

If you consider litigation funding, ensure you understand the fine print and what you agree to before taking the loan. However, it can be a good idea to have this type of loan in your back pocket in case you need it.


Pre-settlement funding is not for everyone. However, there are situations where it can help you make ends meet while waiting to finalize a settlement. Before making any decisions regarding pre-settlement funding, you should always consult with an experienced attorney regarding your best course of action.