Many people involved in car accidents suffer severe injuries requiring extensive medical treatment, surgery, and endless follow-up doctor and physical therapy appointments. According to the National Highway Traffic Safety Administration, there are over 6 million car accidents nationally in the U.S, and over 3 million people get injured each year as a result.
Most injured victims don’t have enough money saved to pay for all of the recurring costs after an accident which prevents them from being able to work when previously they were the sole breadwinner for their families. Consequently, with the lack of money coming in the door, you may need financial assistance to cover daily expenses instead.
When you are struggling to make ends meet while your lawsuit is pending, pre-settlement funding could be the perfect option to help you pay these costs after you’ve exhausted all other financial options. While there are minimal restrictions to how you can spend pre-settlement legal funding, there are things to keep in mind before you decide to use the money on daily expenses.
Can you pay for living expenses with pre-settlement funding?
Yes. You can use pre-settlement funding to cover things like food, housing, medical bills, utilities, daily costs, and other general living expenses. Note that while you can use a lawsuit loan to pay for current expenditures, limiting your spending will minimize your final payment once your case resolves.
Sticking to a budget during a personal injury lawsuit will make the legal process easier and potentially help you achieve the settlement or award you deserve.
How does pre-settlement funding work?
At its most basic, a pre-settlement funding company agrees to provide you with money in exchange for a legal obligation to repay them once you win your case. The entire transaction is non-recourse and tied directly to your lawsuit.
Some people think of pre-settlement funding as the lender “buying” a piece of your award in exchange for the right to be repaid when the case reaches its natural conclusion. This conclusion is whether through mediation, negotiations between attorneys, or after trial.
If your case is unsuccessful in the end, you are protected by law and do not repay the money, which is stated in the legal funding agreement.
The approval process.
First, you apply for the loan. If your case qualifies for evaluation, your attorney must submit relevant documents pertaining to your claim. Once the lender receives your case file, underwriting (seasoned lawyers) will make a final funding decision within approximately 24 – 48 hours.
Then, if you are good to go, the lender notifies you of your eligibility, followed by a funding agreement immediately. The minimum amount you can get is $1,500, and the maximum amount (including pre-settlement funding buyouts) is $2mm. This approval amount depends on how much your case is worth.
To get the final approval of the loan funded, you and your attorney must sign the legal funding contract. Most companies will then quickly submit to their investing team for cash release. With Baker Street Funding, you receive the cash advance from your potential settlement or jury verdict after properly executing the funding agreement. Depending on how you choose to receive your money, you get the pre-settlement loan within 2 – 24 hours.
What pre-settlement funding should be used on.
Before you take out pre-settlement funding, it’s important to consider how much it will cost you once your legal case resolves. This way, you can know how much you will pay from your settlement or award and use your cash wisely.
- Medical Expenses. All types of medical bills, including physical therapy.
- Personal Expenses. These include cellphone bills, household costs, or anything essential you normally spend money on.
- Transportation. You can maintain your car and pay for gas or bus and taxi fares with pre-settlement funding money.
- Electric Bills. Gas and air conditioning bills, or power.
- Rent or Mortgage. You can use the borrowed money to make rent or mortgage payments.
- Meals. You can use legal funding to pay for food or groceries.
What pre-settlement funding should not cover.
While pre-settlement funding can help cover quite a few essential costs, remember that you’ll have to pay back whatever you borrow, plus interest and fees. For this reason, borrow only what you need so you can keep your repayment from your settlement or jury verdict as low as possible.
Avoid using the money on:
- Travel or vacations.
- Purchase of a brand-new car.
- Investments.
- Down payment on a house.
- Unnecessary large purchases like gifts.
- Entertainment.
- Other people’s expenses.
Alternatives to using pre-settlement legal funding for living expenses.
While pre-settlement funding is one way to pay for your cost of living, it is not your only option. Here are some alternatives you should consider:
- Cut your costs. Minimizing unnecessary costs is critical if you’re injured and have difficulty covering general expenses. This might mean cutting back on buying apps or TV subscription services or lowering your electricity and gas consumption.
- Apply for local charity or government help. You might be able to qualify for government financial assistance or a local charity if you have been in an accident and can’t work. Many nonprofit organizations also provide financial aid during tough times.
- Get a job. Even working part-time can help you earn some extra cash for day-to-day expenses. You can also consider giving freelance services through an agency.
The takeaway.
Legal funding can help you pay for all-related costs that result from your personal injury or civil suit. It can mainly assist when the other side is refusing to negotiate in good faith or not offering you anything close to the total value of your claim. However, when you get legal funding, interest is still accruing, so it’s crucial that you only take out enough for your primary needs.
Baker Street Funding offers lawsuit loans for living expenses with non-compounding rates and capped in the third year of your loan.
Interested? Check out all the perks, and apply to qualify for a lawsuit loan.
