Explaining the key differences between pre-settlement funding and traditional loans.
In the legal world, plaintiffs facing lengthy lawsuits often need financial support to manage everyday expenses while awaiting a settlement. Pre-settlement funding offers a solution, but it’s important to understand that this form of financial aid is not a loan. While both pre-settlement funding and traditional loans provide access to money when needed, there are critical differences between the two. In this blog, we’ll break down the distinctions and explain why pre-settlement funding is a unique and beneficial option for plaintiffs.
1. Repayment Only If You Win
The most significant difference between pre-settlement funding and a loan is that pre-settlement funding is non-recourse. This means that plaintiffs are not required to repay the funds if they lose their case. In contrast, a traditional loan must be repaid regardless of the outcome. Pre-settlement funding is directly tied to the success of the legal claim, so if the lawsuit doesn’t result in a favorable outcome, the plaintiff has no financial obligation to repay the money they received.
2. No Credit Checks or Financial History Required
When applying for a traditional loan, lenders evaluate an applicant’s credit history and financial standing. A poor credit score or a history of financial issues can make it difficult or even impossible to secure a loan. Pre-settlement funding works differently. Arthur Funding and similar providers base their decision on the strength of your legal case, not your personal finances. This means that even if a plaintiff has bad credit or no credit history at all, they can still receive funding as long as their case has strong merit.
3. No Monthly Payments
With traditional loans, borrowers are typically required to make monthly payments over time to pay down the principal amount and accrued interest. Pre-settlement funding eliminates this burden. There are no monthly payments required, and repayment is only made once the case is settled or a judgment is awarded in favor of the plaintiff. This allows plaintiffs to focus on their recovery and lawsuit, without the added stress of repaying funds on a fixed schedule.
4. Quick and Easy Approval Process
Traditional loans can take days, if not weeks, to process, as lenders scrutinize an applicant’s financial background. Pre-settlement funding, on the other hand, is often approved quickly—usually within a few days. The application process is streamlined, and funding decisions are made based on the details of the case, in consultation with the plaintiff’s attorney. This ensures that plaintiffs receive financial support when they need it most, without unnecessary delays.
5. Funds for Living and Medical Expenses
Pre-settlement funding is designed to help plaintiffs cover living expenses, medical bills, and other costs that arise during the course of a lawsuit. Traditional loans can be used for any purpose, but pre-settlement funding is typically used to provide financial relief so that plaintiffs can focus on their legal battle without worrying about immediate expenses. This support allows plaintiffs to avoid financial hardship while waiting for a settlement.
6. Designed Specifically for Legal Cases
While loans can be used for a variety of reasons, pre-settlement funding is tailored specifically for those involved in legal battles. It is offered to plaintiffs in lawsuits like personal injury, medical malpractice, product liability, wrongful death, and more. The funding is structured to alleviate the financial pressure plaintiffs face while waiting for their case to resolve, which is not something a traditional loan is designed to do.
Pre-Settlement Funding Provides Risk-Free Financial Support
Pre-settlement funding is a specialized form of financial support that offers plaintiffs the resources they need to cover their living and medical expenses while awaiting a settlement. Unlike loans, pre-settlement funding is non-recourse, meaning plaintiffs only repay if they win their case. With no credit checks, no monthly payments, and a streamlined approval process, pre-settlement funding is a risk-free option that gives plaintiffs the financial stability they need during a difficult legal process.
If you’re a plaintiff involved in a lawsuit and need financial support, Arthur Funding is here to help. Contact us today to learn more about how our pre-settlement funding solutions can help you manage your expenses and focus on your case without the financial burden.
