Understanding the pre-settlement funding idea

Are you expecting some kind of legal settlement or payment? Are you in the middle of a difficult financial and legal battle with a company or insurance company? These situations often seem hopeful, especially given the promise of being compensated. Still, during the lawsuit, there are domestic bills to be paid, and sometimes treatment costs involved. If that is the case, then pre-settlement funding might just be the way to go.

What is pre-settlement funding?

Sometimes called pre-settlement or lawsuit loans, these are loans that come in handy when the plaintiff requires cash for both the legal costs involved in their case and any medical costs and bills that might be associated with a personal injury scenario. It basically provides funding for clients, seeing them through the difficult times when their cases are being decided. It is important to understand, though, that the course is non-recourse in nature. This means it does not have to be repaid unless the settlement actually comes through. This involves a considerable amount of risk on the part of the lender.


It might be the first time you have heard about pre settlement funding, but these loans are actually nothing new. They are only just getting more popular as the public learns more about them. They are especially popular because of the non-recourse clause; if the settlement does not come through, then the borrower does not have to pay anything. The third party normally takes the risk and the hit in case things do not go according to plan. Because of the speed and efficiency of the court system, settlements can take weeks, months and even years to be reached, and most plaintiffs simply do not have the luxury of time.


Despite the obvious benefits of such loans, they are not without their critics. Even though they are helpful, even the industry representatives sometimes agree that interest rates might be higher than the typical loan. However, this can be deemed necessary since they are taking most of the risk.

Before considering or taking a pre-settlement loan, discuss the various options with your lawyer and if possible, seek the services of an independent financial advisor, one with no stake on the process or the outcome.

Pre-settlement funding is helpful, but only when you choose the right company. Go to the Loan Query website today for the best legal funding services.

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