The Pros and Cons of Pre-Settlement Funding in Pennsylvania

In the realm of legal battles and personal injury claims, time is often of the essence. Accidents and injuries can leave individuals struggling to make ends meet, especially when they’re unable to work. This financial strain can be exacerbated when litigation drags on for months or even years. It’s in such circumstances that pre-settlement funding can be a lifeline. However, like any financial tool, it comes with its own set of advantages and disadvantages. In this article, we will explore the pros and cons of pre-settlement funding in Pennsylvania.

The Pros of Pre-Settlement Funding

1. Immediate Financial Relief

One of the most significant advantages of pre-settlement funding is that it provides immediate financial relief to plaintiffs. When you’re injured and unable to work, the bills continue to pile up, making it challenging to cover your basic living expenses. Pre-settlement funding can help you pay for medical bills, rent or mortgage payments, and other essential costs while you wait for your case to settle. This can alleviate a tremendous amount of stress during an already difficult time.

2. No Repayment if You Lose

Perhaps the most attractive aspect of pre-settlement funding is that it is non-recourse. This means that if you lose your case, you are not required to repay the funding. The funding company assumes the risk, making it a safer option for plaintiffs. You only repay the advance if you win your case and receive a settlement or judgment. This can be a comforting thought when you’re unsure about the outcome of your lawsuit.

3. Leveling the Playing Field

Insurance companies and defendants often use delay tactics to put pressure on plaintiffs to settle for less than they deserve. Pre-settlement funding can help level the playing field by giving you the financial stability to wait for a fair settlement. With the financial pressure eased, you and your attorney can focus on building a strong case without rushing to accept a lowball offer.

4. No Credit Check or Employment Verification

Traditional loans and lines of credit typically require a credit check and proof of employment. However, pre-settlement funding is based solely on the strength of your lawsuit. The funding company evaluates your case’s potential and offers an advance based on its merits. This can be a significant advantage for individuals with poor credit or those who are unemployed due to their injuries.

5. Quick and Easy Application Process

Applying for pre-settlement funding is typically a straightforward process. You provide information about your case to the funding company, and they assess its viability. If approved, you can often receive the funds within a matter of days. This quick turnaround can be a lifesaver when you’re facing mounting expenses.

The Cons of Pre-Settlement Funding

1. Costly Fees

While pre-settlement funding offers immediate relief, it comes at a price. Funding companies charge fees for their services, typically in the form of a percentage of your eventual settlement or judgment. These fees can add up, and if your case takes a long time to resolve, the cost of the advance may exceed your expectations. It’s essential to fully understand the fee structure before agreeing to pre-settlement funding.

2. Potential for Smaller Settlements

Knowing that you have pre-settlement funding may make you less inclined to accept an early settlement offer, which can be both an advantage and a disadvantage. While it can prevent you from settling for less than you deserve, it may also lead to more extended negotiations and potentially result in a smaller settlement if the case drags on for an extended period.

3. Lack of Regulation

Pre-settlement funding is not regulated like traditional financial services. This lack of oversight has led to some unscrupulous companies engaging in predatory lending practices. It’s crucial to do your research and choose a reputable funding company to avoid falling victim to excessive fees and unfair terms.

4. Limited Availability

Pre-settlement funding may not be available for all types of cases. Funding companies typically evaluate cases based on their potential for a favorable outcome and the expected settlement amount. If your case doesn’t meet their criteria, you may not be eligible for pre-settlement funding.

5. May Impact Case Strategy

Knowing that you have pre-settlement funding can influence your case strategy. Your attorney may be more inclined to push for a larger settlement, which can lead to a more adversarial and protracted legal process. It’s essential to communicate openly with your attorney to ensure that your case strategy aligns with your goals and financial needs.

The Responsible Use of Pre-Settlement Funding

As with any financial decision, the responsible use of pre-settlement funding is crucial. Here are some tips to ensure you make the most of this resource while minimizing its potential drawbacks:

• Assess Your Immediate Needs: Before applying for pre-settlement funding, carefully assess your immediate financial needs. Calculate the amount required to cover essential expenses, such as medical bills, rent or mortgage payments, and groceries. Only request the amount necessary to alleviate your immediate financial stress.
• Understand the Fee Structure: As mentioned earlier, pre-settlement funding comes with fees. Make sure you thoroughly understand the fee structure and any potential hidden costs associated with the advance. Compare offers from different funding companies to find the most favorable terms.
• Consult with Your Attorney: Your attorney is a valuable resource in this process. Discuss your intention to pursue pre-settlement funding with your legal counsel. They can provide guidance on how the advance may impact your case strategy and help you make an informed decision.
• Choose a Reputable Funding Company: Research funding companies thoroughly. Look for well-established firms with a track record of fair practices and transparent terms. Reading reviews and seeking recommendations from your attorney or peers can help you make an informed choice.
• Have Realistic Expectations: Understand that pre-settlement funding is not a guaranteed source of income. Funding companies carefully evaluate cases and may decline your application if they believe your case lacks merit. Be prepared for the possibility of not receiving funding.
• Budget Wisely: Once you receive pre-settlement funding, budget wisely to ensure you can cover your ongoing expenses. Avoid unnecessary spending, and prioritize essential bills and costs.
• Consider Settlement Offers Carefully: While pre-settlement funding can empower you to reject lowball settlement offers, it’s essential to consider reasonable settlement offers thoughtfully. Prolonging your case unnecessarily can lead to higher legal fees and may not result in a significantly larger settlement.
• Stay Informed: Stay informed about the progress of your case. Communication with your attorney is key. Knowing when your case is likely to settle can help you plan for the repayment of the pre-settlement advance.
• Have a Repayment Plan: Keep in mind that you will need to repay the pre-settlement advance if you win your case. Discuss a repayment plan with your attorney and the funding company to ensure you can meet your financial obligations when the time comes.

Pre-settlement funding in Pennsylvania can be a valuable resource for plaintiffs facing financial hardship during a personal injury lawsuit. It provides immediate relief, levels the playing field, and doesn’t require repayment if you lose your case. However, it comes with its share of drawbacks, including costly fees and the potential for smaller settlements.

Before pursuing pre-settlement funding, it’s essential to carefully weigh the pros and cons and consult with your attorney. Make sure you choose a reputable funding company and fully understand the terms of the advance. When used wisely, pre-settlement funding can be a lifeline during a challenging time.

If you find yourself in need of pre-settlement funding, Fast Funds can provide you with the financial assistance you require while you await the resolution of your case. Our quick and easy application process, competitive rates, and commitment to transparency make us a trusted partner in your pursuit of justice. Contact Fast Funds today and take the first step toward securing your financial future.