Accidents often lead to immense financial burdens: the cost of repairs for any possessions damaged in the accident, high medical costs, and even your regular bills, if you cannot work due to the accident. A settlement can provide you with much-needed funds that will cover some of those damages and allow you to remain afloat. Unfortunately, it can take weeks or even months to get that settlement in your hands.
Can you get an advance on an accident settlement? In short: yes. Pre-settlement funding through a provider can provide you with the funds you need now, rather than leaving you waiting for the funds you really deserve.
What Is Pre-Settlement Funding?
After an accident, the liable party may owe you compensation for the damages you sustained. At Morris & Dewett Injury Lawyers, we aim to help our clients get the compensation they are owed as quickly as possible. Unfortunately, that process can still take months. While we do not charge fees until we win the case, your other creditors might still be sending bills your way.
Pre-settlement funding, also known as an advance on your settlement, is a loan in an amount equal to or less than your anticipated settlement amount. It is issued when you have good reason to believe that you will win your case and receive compensation for the damages you sustained, but you have not yet received those funds. Generally, accident victims will pursue compensation when they believe that they will still need to wait for some time for a reasonable settlement for their accidents.
Pre-settlement funding is available for victims of car accidents, catastrophic injuries, construction accidents, and other serious incidents that result in substantial damage and will, therefore, require significant compensation.
The Benefits of Pursuing an Advance on Settlement Funds
There are several reasons you might choose to pursue an advance on settlement funds. The circumstances of your accident do not matter. You could have a teenage driver who inadvertently totaled the family vehicle and ended up with high medical costs or construction accident injuries from an on-the-job incident. The challenge is that you need the money to cover your bills immediately, rather than waiting for the legal process to conclude.
1. You Can Hold Out for the Best Settlement Offer for Your Needs
When you need funds immediately, any settlement offer can seem highly tempting. Often, however, insurance companies will not automatically provide a fair settlement offer that covers the full damages you sustained in the accident. They may gamble that you will accept an early settlement offer to get those funds in hand sooner, even though they do not fully reflect your needs.
2. You Can Take Care of Bills Immediately
As you recover from a serious accident, many of your creditors will work with you to decrease financial obligations until you can go back to work or have received the money from your settlement. In fact, your lawyer may be able to reduce your medical costs or help you put off medical payments. However, other providers and creditors may not be willing to work with you. When you receive a pre-settlement advance, you can pay those bills on time.
3. You Can Relax Financially
An accident can cause a great deal of financial strain, and dealing with it can put considerable stress on your shoulders. By opting for a pre-settlement advance, you can decrease your overall costs.
The Downsides of Pre-Settlement Advances
While there are advantages to pre-settlement advances, you should also consider the disadvantages before making a decision.
1. You May Have To Repay Funds Even if You Don’t Win
Depending on the terms of your pre-settlement advance, you may need to pay the lender back, even if you do not win or do not win the funds you originally expected as part of your settlement agreement. For some people, that can mean worse financial circumstances than before.
2. You May Face High Interest Rates
While a pre-settlement advance can improve your immediate financial state, it may come with a long-term financial hit as you deal with high interest rates. The longer it takes to get your settlement handled, the more you may end up paying in interest.
3. You May End Up Overspending
Sometimes, receiving an early advance can make you feel overly financially confident. Even if the advance does not cover the full settlement you expect to receive, you can end up overspending, leaving you without the funds you need in the future.
Is an Advance on Your Settlement Right for You?
An advance on your settlement could help streamline your finances as you deal with the aftermath of your claim, but it could also make your long-term financial situation more difficult. Work with your lawyer and a financial planner to determine the best way to handle your finances as you deal with a serious injury claim.