Quick answer: Repayment is due within 3 to 14 days after your settlement cash is disbursed to your attorney’s account. Your attorney will handle the repayment from the settlement proceeds. Stay in touch with your attorney to avoid any delays. Remember, you aren’t required to pay anything if, for whatever reason, your case doesn’t pay out.

Dealing with financial troubles during litigation is never fun, and more often than not, injured victims spend several weeks to months out of work. Whether you were involved in a car accident or medical malpractice, pre-settlement funding helps handle your financial struggles, with no repayment obligation until you win your case and receive your awarded compensation.

After winning your case, however, it’s natural to wonder how quickly you need to repay the pre-settlement funds, especially when interest rates, fees, and other components are involved. Here’s the scoop on:

When Your Loan Repayment is Due
What Can Delay Repayment and What To Do
Paying Off Your Cash Advance Early

When is Your Pre-Settlement Funding Repayment Due?

The repayment of your pre-settlement loan is due the moment your settlement funds are disbursed to your attorney’s trust account, known as an IOLTA account. Most funding companies provide a grace period of 3 to 14 days to settle the loan.

But if your case doesn’t result in a settlement, you owe nothing. The funding is non-recourse, meaning you are not personally liable to repay if you lose your case. This provides peace of mind during a stressful time.

Repayment Process

On the first to the third day, the lender receives a notice regarding the settlement check.
On the fifth to the seventh day, you meet with your lawyer to discuss the settlement payout
On the seventh to the tenth day, your attorney repays the lawsuit loan from the settlement proceeds.

Most attorneys settle the lender’s repayment within a few days. Your attorney is responsible for addressing all priority liens first, then clearing your lawsuit loan.

(READ MORE: STEP BY STEP PROCESS OF REPAYMENT)

What Your Payment Includes

Interest Rates. Interest rates on pre-settlement funding are the money you pay for the cost of borrowing, which can be simple or compounding. Simple interest means you pay interest only on the principal amount, not on added interest.
Length of the Loan. The length of a pre-settlement loan is typically tied to the duration of your legal case. Since the loan is repaid from the settlement, the term lasts until your case is resolved. However, interest rates are sometimes capped at a certain period, such as three years, to prevent excessive accumulation of interest charges.
Fees. Fees can include application fees, processing fees, and administrative fees. Some companies may also charge origination fees.
Repayment Timeline. The repayment timeline refers to the period within which the lender expects repayment after the case is settled. This is often a grace period, which allows the attorney some time to process the settlement funds and pay the advance.

For example, let’s say you received $10,000 in pre-settlement funding at a simple interest rate of 3% per month. If your case took a year to settle for $100,000, you’d owe approximately $13,600, which would be a small percentage of your settlement. This includes the loan amount ($10,000) plus simple interest ($3,600). If the total settlement amount is $50,000, your attorney would deduct the $13,600 from this before you receive your portion.

What Can Delay Pre-Settlement Loan Repayment?

Things like identifying and negotiating liens, getting court and client approvals, and administrative delays can affect the time it takes to pay off the loan. If there’s a hiccup, your attorney can ask the funding company for more time. Failure to do so might result in extra fees and interest charges, drastically increasing the total amount you owe and pushing you into an even deeper financial crisis. It might also raise the bar on your attorney, and even hurt his or her credibility among funding companies.

Sure, we might not be concerned about your attorney’s reputation right now, but poor communication can also make it harder for future clients—people just like you—to get the funding they desperately need.

What you can do if there’s a delay

Contact your attorney right away for an explanation and a clear timeframe for repayment. Make sure all paperwork is submitted on time, stay updated on lien negotiations, and check on the settlement check processing. These steps will help you avoid extra costs and complications.

Should You Off Your Pre-Settlement Cash Advance Early?

Pre-settlement funding is designed to provide financial relief during your lawsuit, and there’s no legal requirement to repay the advance early. However, before deciding to pay the funds off ahead of your settlement, consider the following positive and negative consequences:

Here are some of the positives:

Interest Savings. You may save money on interest, as you’ll only pay interest up to the point of repayment rather than until the settlement is reached.
Fee Reductions. Depending on the funding agreement, you might have to pay fees over time. Early payment could reduce these fees.
Credit and Financial Impact. By settling the funds ahead of time, you could improve your financial standing, potentially increasing your chances of obtaining future funding or loans.
Lien Release: Once the advance is paid off, the lien on your future settlement proceeds is released, giving you more control over your eventual settlement funds.

Here are some of the negative consequences:

No Refund if You Lose. If you choose to repay the advance early and later lose your case, you won’t get that money back.
Prepayment Penalties. Some funding agreements have prepayment penalties or fees, which could add unexpected costs.
Cash Flow Issues. Using available cash to pay a non-recourse advance before the case settles might strain your finances, especially if you have other pressing financial needs.

The Takeaway

Winning your case and receiving a settlement can be a huge relief, but knowing when you need to pay back your pre-settlement funds can help you steer clear of unwelcome surprises. Remember, your attorney has a loan repayment window of 3 to 14 days after receiving your awarded settlement funds. Should there be any delays, deal with them as soon as possible.

And if you want a company that offers more time to repay your loan after your case settles, contact Baker Street Funding at (888) 711-3599 or fill our our application form online. We’ll work quickly with your attorney and have a decision for you within 24 hours. Once approved, you’ll sign a funding agreement outlining the repayment process and terms clearly, including an extension period without any penalties.

With monthly fixed interest rates of 2.95% to 3.4% and capped rates, our interest charges will cease after 3 years or when your case concludes successfully, whichever comes first.

Ready to explore Baker Street Funding’s low-interest lawsuit advances and better terms? Apply for funding in just one minute.