What Is a Pre-Settlement Loan?

A pre-settlement loan—also known as a lawsuit loan, legal funding, or litigation financing—is a type of financial assistance offered to individuals with pending legal cases. Although often referred to as a loan, it is technically a pre-settlement cash advance against the expected settlement or verdict of a lawsuit.

When facing financial pressure during the lengthy legal process, a settlement advance from pre-settlement legal funding can provide support, enabling plaintiffs to manage medical expenses, living expenses, and other bills until their personal injury case is resolved. Below are answers to common questions from our personal injury lawyers that will help you better understand pre-settlement lawsuit funding and whether it could be a good option for you.

What Is a Pre-Settlement Loan? Explained by Andrew Kryder, Esq.

Can My Lawyer Deny Me from Getting a Pre-Settlement Loan?

No. While your lawyer might advise against it, the decision to get a lawsuit cash advance from pre-settlement funding is entirely up to you. It is, however, a good idea to involve your lawyer in the process. Your attorney will likely be notified during the loan application process, as their cooperation is typically required to share necessary case details to get financial support from the lender.

Do Lawyers Give Advances on Settlements?

No. Lawyers are not allowed to provide financial advances to their clients. This practice is prohibited because it can create a conflict of interest. Instead, a third-party lawsuit funding company offers pre-settlement lawsuit loans to help you cover expenses while you wait for your case to resolve.

Can My Lawyer Advance Me Money?

Lawyers cannot legally loan money to their clients for personal expenses or other costs. However, they can help guide you in exploring options for pre-settlement funding with reputable companies, ensuring that you fully understand the terms and conditions before moving forward.

How Do I Qualify for a Pre-Settlement Loan on My Personal Injury Lawsuit?

The process to qualify is fairly straightforward. Most funding companies will assess your case by examining information such as:

• The type of accident
• The extent of your injuries
• The amount of your medical bills
• Any liens on your case
• Details about the defendant’s insurance policy and limits
• The likelihood of a favorable outcome in your lawsuit

The stronger your case and the higher its potential value, the better your chances of qualifying for a larger advance.

How Much Will It Cost Me to Get a Lawsuit Loan?

The cost of obtaining a pre-settlement loan varies depending on the lender and your state’s regulations. Once approved, an interest rate will be applied to the loan amount. Some lenders offer terms where you’re only required to repay the loan if you win your case, but this varies by company. Always review the lender’s repayment terms before committing.

What Happens If I Lose My Case?

Some companies do not require repayment if your case is unsuccessful, but this is not universal. It’s critical to discuss this aspect with the lender before accepting pre-settlement funding to understand any potential financial obligations.

When Do I Repay My Pre-Settlement Loan?

Pre-settlement loans are typically repaid once the lawsuit concludes and you receive your settlement or court-awarded funds. Your attorney will usually handle repayment of your lawsuit settlement loan directly from the proceeds of your case.

Can I Pay Off My Pre-Settlement Loan Early?

Yes, most companies allow early repayment. If you can begin making payments before your case concludes, it may help reduce overall interest costs. Confirm early repayment details with the lender beforehand.

How Long Does It Take to Get Funding?

Pre-settlement loans are designed to provide fast financial relief. Once your application is approved, you can often receive the funds into your bank account within 24–48 hours.

Can I Get Pre-Settlement Funding Without an Attorney?

It’s possible, but less likely. Many lenders prefer working with plaintiffs who have legal representation because it assures them that the case is being handled reliably. Without an attorney, obtaining funding may involve more stringent qualification processes.

What Are the Benefits of Getting a Pre-Settlement Loan?

Pre-settlement loans can provide several benefits, such as:

• Covering necessary expenses like rent, utilities, and medical bills
• Advancing court costs as needed
• Reducing financial stress, allowing you to focus on your recovery
• Helping you avoid settling your case for less than it’s worth due to immediate financial needs
• Offering risk-free funding, if repayment isn’t required for unsuccessful cases

Are There Any Drawbacks?

Yes, there are potential drawbacks. Pre-settlement loans often come with higher interest rates compared to traditional loans. Additionally, they may be more expensive if your case takes a long time to settle. It’s essential to carefully consider these factors and explore other possible financial options.

Can I Get More Than One Lawsuit Loan?

Yes, you can apply for multiple loans if your case’s value is high enough. However, approval for additional funding depends on the lender’s assessment of your case and the already extended advances.

Will the Insurance Company Know I Took Out a Loan?

It is unlikely that the insurance company would know about your pre-settlement loan. While lenders typically file documentation with your attorney to ensure repayment, this information is not shared directly with insurance companies.

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

You can use the funds from your pre-settlement loan however you choose. Many clients use the money to cover attorneys’ fees, to pay court costs, and for household expenses, medical bills, or other urgent costs while awaiting the resolution of their legal case.

Can I Get Pre-Settlement Funding If I Have Bad Credit?

Yes. Pre-settlement loans are not based on your credit score. Instead, lenders focus on the strength of your case and its likelihood of success.

Is It a Good Idea to Take Out a Pre-Settlement Loan?

This depends on your unique circumstances. While pre-settlement funding can provide immediate financial relief and advance funds, you should consider the associated costs, such as high interest rates. Consulting with your lawyer can help you determine if this option is right for your situation.

What Are Some Companies That Provide Pre-Settlement Loans?

Pre-settlement funding companies include:

• Preferred Capital Funding
• Buckeye Legal Funding
• Cartiga

Before choosing a company, compare loan terms and conditions to find the option that best suits your needs.

By learning more about pre-settlement loans, you can make informed decisions that best support your financial stability during your legal case. Always consult your attorney for guidance and assistance throughout this process.