You can get a lawsuit cash advance on a pending settlement. However, the funding company is taking on more risk than if a case has settled and you’re awaiting a payment. After all, they’re paid back out of proceeds you expect to receive. A cash advance can be helpful if you’re struggling financially after an accident. But if your case hasn’t yet settled, we’ll look at the challenges of obtaining a cash advance on a pending lawsuit.
Qualifying for an Advance on a Pending Lawsuit Can Be Difficult
Lawsuit funding companies differ in the cases they cover. Depending on the company, it may have staff specializing in, for example, auto accidents, product liability, etc. A lawsuit cash advance is paid back only when a client’s case wins. That means if the case loses or the plaintiff receives less than expected, the lender won’t be repaid.
Therefore, every applicant’s financial risk is carefully assessed. The level of risk helps determine eligibility for financial help. It also helps calculate interest and how much to offer. Finding acceptable terms (i.e., rates, fees, and repayment schedules) or a company that will finance your lawsuit can be a challenge if your case hasn’t settled.
A Cash Advance Is Not a Loan
Loans must be paid back regardless of your case’s outcome. Even before a settlement, you’ll have to begin repaying the loan principal plus interest. However, a cash advance involves a term-based payback in which the lender is repaid when your settlement proceeds arrive.
The process often works by the lender purchasing a part of the proceeds. That doesn’t mean this option is any cheaper; it’s often more expensive in the long run. But in the meantime, you’ll have the cash to make rent, mortgage, and medical bill payments or cover living expenses. Some clients cover their legal bills with cash advances.
Nevertheless, a lawsuit cash advance can be costly. That’s why many lenders will only qualify you for an amount equal to 10% or 20% of a case’s value. To be safe, ask if the company charges a fixed rate for all types of cases, assigns rates based on a risk model, and whether interest is fixed or compounded monthly.
Notify Your Lawyer In Advance
The funding company will need information from your attorney. Not all lawyers are open to disclosing case details or the idea of legal funding in general. Therefore, getting a cash advance on a pending lawsuit is easier if you discuss the matter with your lawyer. They may know a lender likely to approve your application and offer fair rates.
Your attorney can also prepare the documents the lender may request (including complaints, demand letters, police reports, medical reports, etc.) along with answers to questions it may ask, thereby expediting the process.
Do You Need a Lawsuit Cash Advance?
If you’re doing OK financially, borrowing against your lawsuit can cost an unnecessary amount of money. Look at your finances and what you can afford. A cash advance makes sense only if you have bills and living expenses that can’t wait.
You also don’t have to accept all of what the lender offers. By taking what you need to survive (and knowing what necessities you need it for), you can make the expense more manageable.
Contact Fund Capital America and Apply Today
Funding all types of personal injury cases, we can provide cash advance refinancing if you have a previous legal funding agreement. It can reduce the amount you owe, lower the interest rate, or extend the repayment period. Refinancing and lawsuit cash advances are available to plaintiffs and attorneys, even prior to settlement.
To get started, apply now by submitting our online form. Call 855-870-2274 if you need assistance or have questions.
