The Ultimate Guide to Pre-Settlement Funding Repayment 

Lawsuits can put a strain on your finances, leaving you worried about how to make ends meet. Pre-settlement funding steps in to cover your immediate needs, from living expenses to medical bills, without the need to repay until your settlement is officially completed. But if you want to make the most of this support, it’s essential that you understand each step in your repayment once your case is settled. 

Let’s walk through the process of how repayment is handled and your terms, so that you are better prepared for what comes next.

Pre-Settlement Funding Repayment Terms

Pre-settlement funding repayment refers to the process of paying back the funds advanced to you before your legal case is resolved. Unlike traditional loans, the repayment terms for pre-settlement funding are contingent on the success of your lawsuit.

Specifically, when your case settles or you win a judgment, your attorney will repay the funding company from your settlement proceeds. This process requires your attorney’s cooperation, as he or she handles the repayment directly. Without an attorney, managing and repaying the advance isn’t possible.

Here’s how your repayment works:

1. No Traditional Collateral

Pre-settlement funding is non-recourse legal funding and it is your expected future settlement or judgment that serves as the basis for the advance. This means you only repay it if you win or settle your case. If you lose, no repayment is required.

2. Repayment Amount

The total payment amount for pre-settlement funding includes the following components:

• Principal Amount. This is the initial cash advance you get. This amount is typically a fraction of the estimated settlement or judgment value, often up to 10%.
• Interest Rates. The interest that accumulates on the principal amount over time. This interest is typically compounded monthly, or simple with some lenders.
• Origination Fees. One-time fees for processing the legal funding application.
• Prepayment Penalties. Some lenders charge fees for paying off your pre-settlement funds early.
• Late Payment Fees: Penalties for missed or late payment after the compensation payment is received.
• Monthly Fees. Rare recurring fees that accrue on a monthly basis with some lenders.

3. Duration

The repayment duration for pre-settlement funding depends on the timeline of the lawsuit. Since legal cases can take months or years to resolve, the duration that the advance remains outstanding can significantly impact the total repayment amount due to accruing fees and interest. Some companies may provide a cap on the interest rate, limiting how much the interest can increase over time.

4. Repayment Period

The repayment period, or settlement period, refers to the time frame within which the advance must be repaid after the plaintiff receives the settlement check. Typically, this repayment occurs immediately or within a short period, usually ranging from 3 to 14 days, depending on the lender’s policies.

5. Cancellation Policy

Some funding companies offer a cancellation policy where you can return the cash advance within a specific timeframe, typically 3-7 business days, without any penalties or interest.

6. Default Terms

Default terms specify what happens if your attorney fails to make payment after winning your case. Consequences may include:

• Additional fees or penalties
• Damage to your credit score
• Legal action by the funding company

7. Payment Structure

Once your case settles, the insurance company sends your settlement check to your attorney. This check marks the beginning of your lawsuit loan repayment.

How Your Attorney Handles Your Pre-Settlement Funding Repayment in 3 Steps

Winning your case is a big relief, but understanding the steps that follow is just as important. This is how your attorney handles it:

1) Your Attorney Gives Notification of Settlement Check to the Lender: Day 1–3

On the day your attorney receives your settlement check, your attorney contacts the funding company and requests the exact payoff amount of your lawsuit loan. He or she will also provide them with an estimated timeline for preparing your settlement statement.

Note: Your settlement statement outlines your total awarded amount and all deductions, including attorney fees, case costs, medical liens, and the lawsuit cash advance repayment.

2) You Meet with Your Attorney to Review the Payment Structure: Day 5–7

Within a few days of confirming the payout, your attorney will meet with you to review and approve the settlement statement. Your written approval is required to proceed with the disbursements, otherwise, the process may be delayed.

3) Your Attorney Pays Off the Lawsuit Loan Company: Day 7–10

Approve the settlement statement? Great. Your attorney now starts distributing the funds. Legal fees and medical liens get paid first because of contractual agreements and legal obligations.

Following these payments, your pre-settlement funds are repaid, including all charges. Your attorney will then notify the lender of their payment, confirming the amount and how it was sent. The rest of the funds will be disbursed to you to use as needed.

Best Practices for Plaintiffs

To make this process work best for you, stay informed and proactive:

• Communicate Regularly. Keep in touch with your attorney and the funding company so everyone is on the same page.
• Know Your Agreement. Make sure you understand all the terms and conditions in your funding agreement to help you avoid nasty surprises.
• Keep Good Records. To make the repayment process easier, document everything related to your case and funding. 
• Plan Ahead. If you want to manage your financial future better, start thinking about how you’ll use the remaining funds after repayment.

Better Repayment Terms Await

Learning the ins and outs of pre-settlement funding repayment might seem complicated, but understanding the process can make it manageable and stress-free.

Once your case is resolved, your attorney handles everything, from notifying the funding company about your settlement to disbursing the repayment from your settlement proceeds. You don’t need to worry about managing these details on your own.

If you’re looking to secure your financial footing with a partner who values the conservation of your settlement as much as you do, Baker Street Funding can turn your legal battles into a victory, so your financial stability now and post-settlement is the last of your worries. 

Remember, the total you owe can increase considerably if there are higher interest rates or if your case takes longer to resolve. Apply for pre-settlement funding with the lowest rates today and reduce how much you pay back out of your settlement. To find out if you qualify, apply for funding now or contact us at (888) 711-3599 – Better terms await!

FAQ

Who’s Responsible for the Legal Funding Repayment?

When your case settles or you win a judgment, your attorney is responsible for repaying the funding company from your proceeds. Without an attorney, managing and repaying the advance is impossible.

Is My Attorney Required for The Funding Process?

Your attorney plays a big part in this process. He or she needs to provide detailed information about your case. Make sure all evidence, documents, and any other details the funding company asks for are sent in promptly. Additionally, your attorney keeps the funding company updated on how your case is progressing.

How Can I Get Pre-Settlement Legal Funding?

Getting pre-settlement funding is relatively easy to access if your case is deemed strong enough to win or settle favorably. To get started, simply:

1. Fill out a short application form online or call us at (888) 711-3599— and provide your attorney’s contact information and the type of claim you’re involved in.
2. Our highly qualified lawyers will reach out to your attorney for relevant files and more information about your case.
3. If your claim qualifies, you’ll get the agreed loan amount within hours of signing the funding agreement.