How to Qualify for Settlement Loans

In order to qualify for settlement loans, you’ll need to meet two requirements. First, you must have a pending lawsuit (such as a personal injury lawsuit). Second, you must be represented by a lawyer.

Prior to receiving approval for a lawsuit loan, the funding company will also estimate the value of your lawsuit. Most pre-settlement funding companies offer up to 20% of the estimated settlement amount. This amount is designed to provide you with enough funds to make ends meet while continuing to pursue the lawsuit.

Pre-settlement funding is not a loan: You don’t have to repay anything if you lose your case.

Reasons to Get Pre-Settlement Funding

Pre-settlement funding can help you pay for a number of expenses, especially if your life has been uprooted as a result of the injury and trial. Common uses for the funding include:

  • Living expenses
  • Rent or mortgage
  • Medical fees
  • Rehab expenses

Types of Cases Eligible for Funding

In order to be considered for pre-settlement funding, your attorney is required to provide some information about the lawsuit. Pre-settlement loans are possible for many types of lawsuits, but companies typically work with individuals who were demonstrably injured by the defendant. The following are types of lawsuits that are frequently eligible for pre-settlement funding:

  • Personal injury
  • Auto accident
  • Wrongful death
  • Slip and fall
  • Premises liability
  • Medical malpractice
  • Product liability
  • Worker’s comp
  • Nursing home abuse
  • Employment discrimination

Understanding the Process

Pre-settlement is a type of non-recourse cash advance, which means you don’t have to repay the funds if you don’t win your lawsuit. Here are five steps to expect when seeking a cash advance on your pending lawsuit:

  1. Call a pre-settlement funding company.
  2. The company discusses your case with your attorney to determine a cash advance amount based on estimated value of claim and likelihood of winning lawsuit.
  3. If you are approved, an offer is presented to you and your attorney.
  4. If you accept the offer, sign the agreement.
  5. Money is sent to your attorney’s firm and the firm pays you.

Although processing times can vary, pre-settlement funding companies understand individuals need money as soon as possible and attempt to have a decision within five business days. You can support the timely completion of your application by providing all requested documentation as quickly as possible.

Once you’re awarded your settlement in court, the funds are first used to pay your lawyer and any court fees. After that, the remaining funds are used to repay the pre-settlement funding company, including any fees that were agreed on. If there’s not enough money left to repay them in full, you aren’t responsible for the difference. If there is money left after everyone has been paid, you get the remaining balance.

Avoid rushing through the negotiation process: Pre-settlement funding gives you and your lawyer more time to negotiate a better settlement, rather than feeling constrained by pressing financial issues.

Questions To Ask When Applying For Pre-Settlement Funding

  • Do you operate in my state?
  • What type of interest or fees do you charge? Do they compound over time?
  • What are the terms of the pre-settlement funding agreement?
  • How quickly can I receive my cash?
  • Is this a non-recourse advance, or am I required to pay back the fund if I don’t win my case?

Pros & Cons of Pre-Settlement Funding

You may find yourself in need of cash for medical bills and other expenses while you await the result of your lawsuit. At this point, you may be considering whether or not you should pursue a settlement cash advance to meet your existing financial needs.

There are many advantages to pursuing a pre-settlement cash advance. Make an informed decision by understanding both the advantages and disadvantages.


The following are the advantages of pre-settlement financing

  • Cash advance covers immediate and urgent financial needs with no long waiting time.
  • You can afford to wait on a fair outcome and not settle for the first and lowest settlement offer.
  • Risk free – You owe nothing if you lose the lawsuit.
  • Funding does not depend on a good credit score.
  • There is no employment check required.
  • The process is usually a fast one, generally just taking a few days.


As with almost any financial transaction, there are cons to consider when pursuing pre-settlement funding. Here are some potential drawbacks to consider:

  • You will need to pay fees and interest.
  • Not all lawsuits are eligible for a pre-settlement funding.
  • Lawsuit funding is not regulated like other types of financing.

Understanding Simple vs Compounding Rates

It always costs money to borrow funds, and pre-settlement funding is no different. You’ll see one of two types of rates charged on your borrowed funds, which can drastically change how much you owe once you actually receive your lawsuit settlement. Here’s an explanation of each one and what to expect.

Learn about interest rates: Pre-settlement funding can be structured in different ways. Understand the true costs before you sign.

Simple rates: Interest is only charged on the amount you finance.

Compounding rates: Interest is added to your balance and compounds. That means each time new interest is charged, it applies to any previously accrued interest. The longer it takes to repay the financed amount, the less money you’ll have leftover.

Pre-settlement Funding Alternatives

When you’re going through a lawsuit as a plaintiff, you might feel like pre-settlement funding is the only way to navigate your finances while you’re waiting out the legal system. But there are a few other options to consider as well.

Personal loan: Many personal loans are unsecured, meaning you don’t need any collateral in order to get approved. The interest rate you’ll pay largely depends on your credit score, but it could be less than what a pre-settlement funding company charges. Shop around to compare your options.

Credit card cash advance: Most credit cards offer a cash advance, which could help cover short-term financial needs. The interest rate is usually higher than your card’s standard rate. Also note that interest starts to accrue right away, rather than at the beginning of your next statement.

Help from family and friends: Social media makes it easy to ask for help from family and friends, without having to put yourself out there with one-on-one conversations. Setting up a GoFundMe account, for instance, allows you to communicate your needs (such as paying for medical expenses) and receive funds from your community.


When is pre-settlement funding appropriate?

If you are finding it difficult to make ends meet because you are unable to work or your income has been reduced due to your injuries, pre-settlement funding may be the right choice. This type of cash advance can also help when you’re facing medical care expenses that are a direct result of their injuries.

Does the defendant find out about your pre-settlement funding?

No, there is no requirement nor reason to inform the defendant about your application for pre-settlement funding. Only the necessary parties will be involved, including you, your attorney, and your chosen cash advance company. The idea behind pre-settlement funding is to give you the financial flexibility to truly maximize your success in the settlement.

How much can I get?

The amount of your pre-settlement funding depends on the likelihood of a successful case and how much the company anticipates you’ll receive. That’s why the company requires a conversation with your lawyer; they’ll get all the information they need to give you an offer. While you won’t receive the full amount upfront, you may be able to borrow as much as 20% of your estimated settlement funds.

Do you need good credit in order to be eligible?

Since this type of funding is a cash advance rather than a typical loan, you don’t need to meet any credit score minimums. The strength of your case and expected settlement amount are both used to determine your eligibility, not your personal financial situation.

What happens if you lose your case?

If you do lose your case, you don’t have to repay your cash advance or pay any fees. The risk is taken on by the pre-settlement funding company, not by you. That’s why they take the time to discuss the lawsuit with your lawyer to determine how likely your chances are of winning. It’s also why they charge a fee.