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Pre-Settlement Funding & Lawsuit Loans

When an individual suffers from some type of an injury, following the negligence of another party, in order to obtain the monetary damages from these actions, in an effort to combat those injuries, it is vital to file a personal injury claim. The problem comes when an individual gets injured from the incident in question, and therefore may have exorbitant medical bills, and may not be able to work and earn money for bills or the costs of simply living for themselves as well as their loved ones. In such instances, they will need something known as legal funding or pre-settlement funding. Pre-settlement funding, also known as a lawsuit loan or legal funding, gives plaintiffs access to money before a case is settled so they can pay for expenses mounting during the legal process. But the arrangement is controversial, the laws are unclear and caution is warranted. According to the team at Express Funding, the best company for pre-settlement funding in Florida, getting this money can help individuals to wait until their settlement is actually agreed upon, and then eventually paid out – both of these instances take months or in some cases, even years to achieve.

Filing lawsuits and litigating can be expensive and time-consuming. Even when a big verdict is handed up or a personal injury settlement within your personal injury claim is likely, it takes time before the money actually arrives. In the meantime, life’s expenses continue to mount. There are options to fill this gap that go by several names: lawsuit advances, lawsuit loans, structured settlement loans, third-party consumer litigation financing, non-recourse advances, non-recourse loans and alternative litigation financing. Whatever they’re called, these financial products are controversial and should be considered with caution, especially in states where they’re not strictly regulated. Despite how valuable it is, many individuals have little idea of what pre-settlement funding actually is.

What is Pre-Settlement Funding?

Lawsuit loans or a pre-settlement funding provided before you obtain a personal injury settlement, occurs when the plaintiffs are advanced money from a court award before the final decision is made. The company advancing this money will likely require documentation, including possibly medical records information from your attorney about your case. According to the team at Express Funding, the top legal funding in Florida, if you win your case, the amount you were advanced, minus agreed-upon interest charges, will go to the company. If the case does not settle in your favor, you typically won’t owe anything. The U.S. Chamber Institute for Legal Reform, a prominent critic of the practice, says the arrangement involves hedge funds investing money in lawsuits in exchange for a percentage of the settlement or judgement. It says litigation funding started in Australia and spread to the United Kingdom, the U.S., Canada, Europe and Asia.

Individuals Against Lawsuit Loans & Legal Funding

The most common criticism of these kinds of lawsuit loans or legal funding for your personal injury claim, is that the fees and interest can be excessive. In some cases, they have even been called usurious. In most states, these financial products are unregulated. They can be more expensive than credit card debt. One loan company disclosed on its website that its maximum annual rate was 98 percent, according to a report by CNBC. Another company charged a maximum rate of 26.9 percent in the first year of the advance. The study found that funders used “controversial techniques to calculate the amount due from the clients.” These techniques included various types of interest compounding, minimum interest periods and fees to add costs to the contract. The Institute for Legal Reform, which is affiliated with the U.S. Chamber of Commerce, asserts that litigation funding creates more lawsuits and can unnecessarily prolong litigation. The complaint is that plaintiffs may reject reasonable settlement offers if they have this funding. For more information on pre-settlement funding and more for your personal injury claim, be sure to contact Express Funding America today.