If you’ve been involved in a personal injury lawsuit, you may have heard of pre-settlement funding. This financial solution helps plaintiffs bridge the gap between filing a lawsuit and receiving the compensation they rightfully deserve. However, one question that many people have when considering pre-settlement legal funding is if there are limitations on what they can use the funds for.
Here, we will discuss what pre-settlement funding is, the few restrictions on spending these funds, and some wise ways to utilize your advance.
What is Pre-Settlement Funding?
Pre-settlement funding, also known as lawsuit loans or lawsuit advances, is a type of non-recourse cash advance provided to plaintiffs in a personal injury case. The primary purpose of this financial tool is to help plaintiffs manage their living expenses and mounting bills while waiting for their cases to be settled or get resolved in court. Non-recourse, in this context, means that the funds need to be repaid only if the plaintiff wins the case or receives a favorable settlement.
Additionally, obtaining a second round of pre-settlement legal funding is an option if you run out of money before your case is settled. However, the amount of funding you may qualify for depends on several factors. More specifically, the size of your probable settlement and how much we provided you initially both play a big role in determining the amount available for an additional advance.
Restrictions on Spending Pre-Settlement Funds.
While there are no hard-and-fast rules on how you can spend your pre-settlement funds, there are some essential limitations to keep in mind. The most notable areas you are not allowed to use these funds for include:
1. Legal-case-related expenses: The funding should not be used to pay for attorney fees or other case costs.
2. Business-related investments: Pre-settlement legal funding should not be used for starting or expanding your business, making investments, or other entrepreneurial endeavors.
3. Illegal activities: Using the pre-settlement funds for anything illegal or unethical is strictly prohibited.
Wise Ways to Use Your Pre-Settlement Funds.
While there aren’t many restrictions on what you can spend your pre-settlement funds on, ensure you use the money wisely. Some recommended ways to utilize your pre-settlement cash include:
1. Living expenses: Cover your rent or mortgage payments, utility bills, groceries, and other day-to-day living costs.
2. Medical bills: Use the funds to cover healthcare expenses, including doctor visits, treatments, or medications.
3. Debt payments: You are allowed to keep up with debt payments, such as credit card bills, car loans, or student loans, to avoid incurring additional interest and penalties.
4. Transportation: Staying mobile during your lawsuit is essential. If your car needs repairing or you rely on public transport, don’t hesitate to use the funding for transportation expenses.
5. Childcare and educational expenses: Pre-settlement legal funding is beneficial when you use it to cover childcare expenses or tuition fees for your family members.
Maintain Financial Discipline.
Even with the generally lenient guidelines on spending the pre-settlement legal funding, maintaining financial discipline is key to having money when you need it. Keep track of your expenditures and avoid using the cash on frivolous or unnecessary purchases. Remember, the primary goal of pre-settlement funding is to keep you afloat financially during the lawsuit process, so be mindful of preserving your money for as long as necessary.
The Takeaway.
Though there are minimal restrictions on how you can spend your pre-settlement funds, the priority should always be meeting your essential expenses and financial obligations. By being prudent with your spending choices and steering clear of illegal activities or case-related costs, you can successfully utilize pre-settlement funding to navigate through your personal injury case until its conclusion.
Ultimately, pre-settlement funding helps you withstand financial pressures as you await a fair and just resolution to your case.
With Baker Street Funding, we help you explore your funding options and get you the money you need as quickly as the same day you get approved. Whether you are looking for post-settlement funding, an additional advance, or just need money to help you get through your case, we’ll help you get what you need fast.
See why Baker Street Funding is your best option for legal funds. Apply today.
