What Is a Pre-Settlement Loan?

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A pre-settlement loan, also known as a lawsuit loan, litigation financing, pre-settlement funding, lawsuit funding, legal funding, or lawsuit loans, is a type of financial assistance provided to individuals who are involved in pending legal cases. Pre-settlement loans are not technically loans but rather a cash advance against the future settlement or verdict of a pending lawsuit.

Getting pre-settlement lawsuit loans typically involves a third-party funding company reviewing the details of the plaintiff’s case and determining its likelihood of success.

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Below are answers to questions that could help you better understand pre-settlement loans and how they may or may not be a good option for you.

In this Article

Do I qualify for a loan on my Illinois personal injury lawsuit?

Most companies have intake systems or loan specialists who will gather information about your case and quickly make an assessment as to whether or not you qualify. A higher value case can qualify for a larger advance. Conversely, a more modest case could only qualify for a modest amount, or it may be denied.

How much will it cost me to get a loan on my Illinois personal injury claim?

The application process for an injury loan is usually free. If you are approved for a cash advance, there will be interest charged. The interest rate and how the interest is charged is different for each lender and may vary between states. If you do not receive a settlement, some loan companies may not require repayment.

If I lose my case do I have to repay the loan?

Some litigation loan companies do not require repayment of your loan if your claim is unsuccessful. However, some do. Before taking out a loan, you should understand all the terms. If you are considering a litigation loan you should look for a lender that does not charge in the event of an unsuccessful case.

Is my attorney responsible for the pre-settlement loan if I lose my case or is not paid from my settlement?

Ultimately, if you take out a loan, you are responsible for it. In some instances, your attorney may inadvertently not pay your loan from your settlement proceeds. This does not relieve you of your financial obligation.

Can my lawyer loan me money instead of taking a pre-settlement cash advance?

No. A lawyer cannot loan a client money as it creates a conflict of interest. That is why there are companies that can make litigation loans. In many ways these lawsuit cash advances are no different than a car loan that uses the car as security for the loan.

How large of a pre-settlement loan can I get for my lawsuit?

The size of your pre-settlement loan is ultimately in the hands of the lender and how valuable they determine your case to be. You should be able to obtain a more sizable lawsuit cash advance for a more sizable lawsuit.

In the end, the pre-settlement lender will assess the risk of the loan relative to the loan amount and make a determination.

Is it a good idea to take out lawsuit settlement loans on my injury case?

To determine if it is a good idea to take out pre-settlement lawsuit funding, you should first consult with your lawyer. The answer to this question will depend on a number of variables including the length of time you will have the loan outstanding, the interest rate, the value of your lawsuit, the strength of your case, your unique financial situation, and many other factors.

When do I have to pay back my personal injury loan to the bank or lawsuit settlement funding company?

Normally, Illinois lawsuit funding is paid back at the end of the lawsuit when the settlement funds arrive. In most instances, your attorney will request a payoff from the lender and send payment directly to them.

Can I pay my pre-settlement lawsuit loan off before the end of my case?

Usually, yes. Most companies are happy to have the pre-settlement legal funding repaid before the lawsuit concludes. If you’re able, it could be a good financial decision to begin to make monthly payments before your case finally settles.

Can I get more than one lawsuit loan or will the pre-settlement funding company deny my application?

You can take out more than one loan if your personal injury lawsuit value is high enough. Again, you will probably find it easier to obtain larger loans on a bigger case. If you have a good case with substantial value, you can probably get more than one loan.

Should I tell my lawyer about getting a pre-settlement loan?

Yes. You should tell your lawyer about getting a pre-settlement loan. Your lawyer is going to be involved in the loan application process and will be notified if you apply for a pre-settlement loan.

What can the money I get from my pre-settlement loan be used for?

What Can the Money I Get from My Pre-Settlement Loan Be Used For?

Once you receive the funds the money is yours to use as you see fit. Most injured clients get pre-settlement cash advances to use for rent, utilities, food, medical care, and other living expenses while their case is still being settled.

If I have bad credit, or no credit history, can I still get pre-settlement funding?

Yes. You can obtain a pre-settlement loan even if you have bad credit or no credit. Traditional banks have guidelines that may require a certain credit score in order to qualify for a loan. When dealing with an injury loan, the lender is more focused on the value of your lawsuit and the likelihood you will win.

What are the benefits of getting a pre-settlement loan?

The benefits of a loan largely depend on your individual circumstances. Some benefits include:

  • Funding to pay medical bills or medical co-pays
  • Using the loan for household expenses like groceries, rent, and utilities
  • Providing you with financial funding so that you do not feel pressured to settle your case quickly for less than full value because you need money now
  • If you lose your lawsuit, many companies will not require you to repay the loan

Are there any drawbacks to getting Illinois lawsuit loans?

Yes. Litigation loans are generally higher interest loans. Though the loans are relatively quick and easy to obtain, they are more expensive than traditional loans. You may want to consider other options before taking out a pre-settlement loan.

How long does it take to get the money from my personal injury loan?

Generally, you can receive funding within 24–48 hours after your application is approved. The application process is usually completed on the same day you apply.

What if I don’t have a bank account?

You can still obtain lawsuit loans even if you don’t have a bank account. Some companies can wire the money to a currency exchange or Western Union for pick up. Others may allow you to pick up the funds at their facility.

Will the insurance company know I have taken out a personal injury loan?

It is possible but unlikely that the insurance company will know you have taken out a loan.

Can my lawyer prevent me from getting a loan?

No. A lawyer may discourage you from getting Illinois pre-settlement funding, but ultimately the decision is yours and yours alone. However, it is always a good idea to discuss it with your attorney.

How do I know if my case qualifies for a loan?

Each lender will have its own method of qualifying a lawsuit for a loan. However, most lawsuit loan companies will require the following information or variations of this information:

  • Type of accident
  • Accident details including where, when and how it happened
  • Description of your injuries
  • Amount of medical bills
  • Information about any medical liens on your case
  • Information about the insurance company for the other side
  • Policy limits
  • Your attorney’s contact information
  • Information about any other loans on your case

Can I get a loan if I do not have an attorney?

It is less likely but still possible. When setting up the loan, the lender usually files a notice with the applicant’s lawyer as a way of ensuring payment when the personal injury lawsuit settles. If there is no attorney involved, funding companies may not be as comfortable loaning funds.

What are some companies I can use to obtain a loan from on my injury lawsuit?

The answer may depend on the loan terms and your specific needs. Loan terms vary from between companies. If you decide to proceed with a loan, here are some companies that may be able to help you:

As with any financial decision, you should carefully consider all your options.

What Is a Pre-Settlement Loan?
A pre-settlement loan is a type of financial assistance provided to individuals who are involved in pending legal cases.

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