What Is a Pre-Settlement Loan Company?

Handling a case can have a significant strain on anyone, more so if you don’t have enough finances. In cases where an accident has left a victim with severe injuries, getting back to work might take longer than anticipated. During such times, any chance at financial assistance can help make life bearable, and that is where a pre-settlement funding company comes in.

Pre-settlement loan companies are the relief plaintiffs need during their difficult financial moments. The suitable description of a pre-settlement loan company is a company that gives a plaintiff a loan in advance before the settlement of their claim, for purposes of helping them meet necessary living expenses pending settlement of their lawsuit.

What Is a Pre-Settlement Loan?

When instituting a claim, the greatest hope is that at the end of the negotiation or litigation process, a settlement will be reached. As the name suggests, a pre-settlement loan is, therefore, an advance loan pending settlement.

Various people have however argued that the term loan should be removed and replaced with funding; unlike a typical loan where repayment of the amount owed is mandatory, for a pre-settlement loan, the plaintiff doesn’t have to repay if the claim is lost. Pre-settlement loans have helped so many people in dire financial needs commence their claim process. Therefore, they are necessary services in the legal process.

For a pre-settlement loan, the pre-settlement funding company does not give a timeline for repayment. With the judicial system having several cases to determine, in a worst-case scenario, a personal injury lawsuit might take up to a maximum of three years to finalize.

Therefore the plaintiff only pays once they get their settlement money regardless of the timeline taken. Although plaintiffs in personal injury claims are known to be the greatest beneficiaries of pre-settlement loans, such funding is available for various claims:

  • Medical malpractice
  • Work-related injuries
  • Slip and fall accidents
  • Auto accidents

Choosing a Pre-Settlement Funding Company

Before you decide to seek help from a pre-settlement funding company always ensure you have detailed your needs. Subsequently, step out with a mind that you want to find a company that can serve your best interests. While finding a pre-settlement funding company that is entirely in alignment with your situation is hard, there is undoubtedly still a company out there for you.

Interest Rates

Remember, a pre-settlement funding company is in business. Even though the company stands a chance of losing their money if you are unsuccessful in your claim, interest on the owed money is payable if you end up unsuccessful. Therefore, ask questions about the interest rates and consider them against those of other companies before making your decision.

Comprehensive Contract

A reputable pre-settlement funding company will value clear contracts. Working with your attorney can help you choose a good company. Additionally, most attorneys have built networks with pre-settlement funding companies, therefore hiring an attorney prior can help you get funding from a reputable pre-settlement funding company.

Experience of the Pre-Settlement Funding Company

Experience in structured settlements should be among the things you put your focus on when sourcing for a pre-settlement funding company. Pre-settlement funding companies that have been in practice for some time dealing with several clients are better placed to offer you better terms.


Pre-settlement funding is unregulated in most states because the funding is not considered as a loan. However, some states have enacted regulations to classify it as a traditional form of lending. Notably, different states have different laws on traditional forms of lending; therefore, you should pay attention to the regulations in your state and ensure that you only settle on a licensed company according to state laws.

Qualifications of Pre-Settlement Funding

The very first qualification is whether you have retained an attorney. A pre-settlement funding company is not going to consider your application if you are not working with an attorney.

Secondly, the chances of success of your case determine whether you can qualify. How do you know whether your case has high chances of success? The answer is definitely working with an attorney.

Also, the only way a pre-settlement funding company is going to advance funding your way is if your case falls within the lawsuits accepted by the company.