Recovering from a personal injury caused by another person’s negligence is often overwhelming. You may experience unrelenting pain and emotional trauma. On top of which, you may have financial stress stemming from your inability to work. Suing the person responsible for your accident may be the best way to obtain the compensation you deserve, but chances are your case won’t be resolved overnight.

So what happens if you are a plaintiff in a personal injury lawsuit and you need cash while your case is pending? You could ask friends or family for a loan. You could try to get a personal loan. In a worst-case scenario, you could borrow against the equity in your house, pull funds from your retirement fund or try to rely on credit cards. Or perhaps you heard about lawsuit settlement funding and you’re intrigued by this option.

No matter what, it’s important that you make a rational, informed decision, rather than making a snap decision based only on desperation. That being stated, here are some key questions to ask before getting a lawsuit settlement funding.

How does it work?

  • A plaintiff such as yourself who has been injured in a car crash, slip and fall or work-related accident is awaiting the settlement of his or her case.  He or she may need money to cover routine  personal expenses.
  • The plaintiff then contacts a legal funding company and fills out an application. Based on the information supplied by the applicant and his or her lawyer, the company determines the likelihood of the case being settled in the plaintiff’s favor, and the probable settlement amount. Because the company will assume some financial risk, it will only take applicants with the most promising cases.
  • If the company decides the applicant is qualified, his or her attorney and the funding company negotiate the terms of the funding – such as the amount of the funding, as well as any charges.  All parties to the agreement then sign a contract.
  • If the plaintiff prevails in court or reaches a settlement with the responsible party, payment to the funding company (including applicable charges) gets paid from the proceeds.
  • If the settlement is less than expected, the plaintiff’s lawyer may try to negotiate with the funding company.

What are the chances of winning my case?

A lawsuit settlement funding is granted based on the strength of the case rather than the applicant’s financial standing. This means that you may qualify regardless of your credit score. However it also means that you won’t qualify if you don’t have a good case. Therefore, you should have an honest conversation with your attorney about the likelihood of a favorable outcome before you apply for a lawsuit funding.

How long will it take to settle my case?

You should be sure to ask your attorney how long it could take to resolve your case before applying for a funding. Depending on the complexity and other relevant factors, personal injury lawsuits can drag out for months or even years. Because the company that provides the funding will recoup not only the funded amount, but also any applicable charges from your settlement, experts generally advise plaintiffs in protracted litigation against securing this type of funding.

Get specifics about charges and fees

If you can’t find the relevant information online, call the company to ask about application fees (if any). Although many companies don’t require these fees, those that do may be willing to waive them in certain circumstances.

You should also ask about the amount of charges and what you will owe over time. Remember, the company will recoup not only the actual amount of the funding made, but also any applicable charges. By asking these questions before hand, you won’t be caught off guard by the amount the company claims from your settlement.

Ask about a cap

As a matter of practice or policy, some companies may agree to refrain from adding charges after a designated length of time. By choosing one that does so, you’ll ultimately be able to keep more of your settlement money.

Ask for your attorney’s input

Generally, you must be represented by an attorney to qualify for this type offunding. He or she can provide advice and help you select a company. He or she can also help negotiate the best possible terms before you sign a contract.

Ask if the company is a member of ARC or follows its practices

The Alliance for Responsible Consumer Legal Funding is the leading trade association for the lawsuit funding industry. All of its members agree to abide by its standards pertaining to transparency and disclosure in terms and relationships. If it isn’t a member of ARC, ask if the company follows its list of best practices, which cover matters ranging from potential conflicts of interest, to false advertising and funding amounts.

Ask about actual or potential conflicts of interest

The company you choose should not have any financial links to your lawyer, a doctor, specialist or anyone else involved in your case.

Ask yourself if you have any other way to cover your expenses

Do you have any other options? Could a friend or relative help? If you have a good credit score, you may be able to secure a personal loan. Will you able to go back to work? If so, how soon?

To recap…

A lawsuit settlement funding, which is also known as pre-settlement funding, is a viable means of financial relief for many plaintiffs in personal injury lawsuits. This type of transaction can be used to alleviate financial stress while a case is pending.

It is important to keep in mind, that the company will recoup not only the amount funded to you, but also any charges described in your contract from the proceeds of your settlement. Consequently, this type of funding may not be the best option for you if you are involved in protracted litigation.

If you are a plaintiff in a personal injury case and you’re faced with mounting expenses, it is easy to feel overwhelmed. But by asking the right questions, as we’ve detailed above, you’ll be able to decide whether a lawsuit settlement funding is best for you.

Oasis provides pre-settlement funding, also known as consumer litigation funding, to its customers through different products depending on their state of residence or cause of action. Many consumers will be provided pre-settlement funding in the form of a purchase agreement, which assigns a portion of the pending proceeds from their legal claim. Other consumers, such as those in SC and CO will be offered a funding in the form of a pre-settlement loan, sometimes referred to as a lawsuit loan. These transactions have important differences, therefore, consumers should carefully review and be aware of the type of transaction that is offered to them by any funding company.