If you’ve been involved in a personal injury lawsuit, you may have heard of pre-settlement funding. This financial solution helps plaintiffs going through financial hardship bridge the gap between filing a lawsuit and receiving the compensation they rightfully deserve. However, one question many people have when considering pre-settlement loans is if there are limitations on what they can use the funds for. Depending on the lender and its funding guidelines, there are minimal or no restrictions over how you can spend a lawsuit loan in the United States.
Here, we will discuss pre-settlement funding, the few restrictions on spending these funds, and some wise ways to use your advance.
What is Pre-Settlement Funding?
Pre-settlement funding, or lawsuit loans or 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 you manage your living expenses and mounting bills while waiting for your case to be settled et resolved in court. Non-recourse, in this context, means that you have to repay the funds 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. 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 initially provided play a significant role in determining the amount available for an additional advance.
One of the most significant benefits of pre-settlement funding is that credit scores or income proof are not a requirement. Additionally, there is no repayment until you win your case. This is especially helpful for individuals with disabilities due to their accidents and for families who need financial assistance until the case is won.
Restrictions on Spending Pre-Settlement Funds.
While there are no hard-and-fast rules on how you can spend your pre-settlement funding cash, there are some important limitations to keep in mind. The nonqualified expenses are:
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 a lawsuit loan for anything illegal or unethical is strictly prohibited.
Wise Ways to Use Lawsuit Loans.
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 Expenses: 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.
Though there are minimal restrictions on how you can spend a lawsuit loan, you should always prioritize using your money to meet 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 money to get through your personal injury case until its conclusion.
Ultimately, legal funding helps you withstand financial pressures with much-needed funding 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 within a reasonable period of time in just 24 hours.
See why Baker Street Funding is your best option for legal funds. Apply today.