What Are Pre-Settlement Loans?

Pre-settlement loans are cash advances provided to plaintiffs who are waiting for their legal cases to settle. Unlike traditional loans, these advances are non-recourse, meaning if you lose your case, you typically don't have to repay the funds. This type of funding serves as a financial bridge for plaintiffs who need money while their attorney negotiates a settlement.

In Maryland, pre-settlement funding companies evaluate your case based on its strength and potential settlement value, not your credit score or employment status. The funds can be used for living expenses, medical bills, rent, or any other costs you face while waiting for your settlement to finalize. Most companies provide funding within 24-48 hours after approval, making it a relatively quick solution for those in financial distress.

How Pre-Settlement Funding Works in Maryland

The process for obtaining pre-settlement funding in Maryland is straightforward. First, you submit an application to a funding company, providing details about your case. The company then contacts your attorney to verify case information and assess its merits. Based on this evaluation, they determine if your case qualifies for funding and how much they're willing to advance.

If approved, you'll receive an agreement outlining the terms, including the advance amount and repayment structure. These advances typically use a non-compounding fee structure rather than interest rates. After signing the agreement, funds are disbursed via check, direct deposit, or wire transfer. Repayment occurs directly from your settlement proceeds, handled by your attorney when your case resolves. If your case doesn't result in a settlement, many companies waive repayment, though this varies by provider.

Maryland Pre-Settlement Funding Provider Comparison

When seeking pre-settlement funding in Maryland, it's important to compare providers to find the best terms. Law Capital offers funding ranging from $500 to $100,000 with a focus on personal injury cases. They promote a 24-hour approval process and advertise no monthly fees.

Oasis Financial specializes in auto accident and workers' compensation claims in Maryland, with funding amounts typically between $500 and $100,000. Their application process is entirely online, making it convenient for injured plaintiffs.

USClaim provides funding for various case types including slip and fall accidents, medical malpractice, and product liability claims. They emphasize their non-recourse structure, meaning clients pay nothing if they lose their case.

The table below compares key aspects of these providers:

  • Law Capital: Funding range $500-$100,000; 24-hour approval; No monthly fees
  • Oasis Financial: Funding range $500-$100,000; Online application; Specializes in auto and work comp
  • USClaim: Various case types; Non-recourse funding; Multiple disbursement options

Benefits and Drawbacks of Pre-Settlement Loans

Pre-settlement funding offers several advantages for plaintiffs in Maryland. The most significant benefit is immediate financial relief during what can be a lengthy legal process. This funding can help cover essential expenses like rent, utilities, medical bills, and groceries when you're unable to work due to injuries. Additionally, having financial support may prevent you from accepting a low settlement offer out of desperation.

However, pre-settlement advances also come with potential drawbacks. The fees can be substantial, sometimes resulting in significantly reduced settlement proceeds. J.G. Wentworth, a financial services company, notes that rates can range from 2% to 4% monthly, which accumulates over time. Another concern is the lack of uniform regulation in the industry, though American Legal Funding points out that Maryland does have some consumer protections in place. It's also important to understand that funding approval depends entirely on the strength of your case.

Pricing and Cost Considerations

The cost structure of pre-settlement funding in Maryland typically involves fees rather than traditional interest rates. These fees generally range from 2% to 4% monthly, though some companies like Peachtree Financial offer fixed-fee structures. For a $10,000 advance held for 12 months, you might pay between $2,400 and $4,800 in fees.

Some funding companies use a tiered fee structure where rates increase over time. Others employ a flat fee that's calculated when the advance is provided. Lighthouse Legal suggests comparing the effective annual percentage rate (APR) across providers to better understand the true cost. When evaluating options, ask about additional charges such as application fees, processing fees, or underwriting fees that might not be immediately apparent. Your attorney can help review funding agreements to ensure you understand all costs involved before accepting an advance.

Conclusion

Pre-settlement loans can provide crucial financial support for Maryland injury victims navigating the legal process. While these funding options offer immediate relief and breathing room to pursue fair settlements, the associated costs require careful consideration. Before applying for pre-settlement funding, consult with your attorney to evaluate if this option aligns with your financial needs and case circumstances. Understanding the fee structures, repayment terms, and provider reputations will help you make an informed decision during an already challenging time. With proper due diligence, pre-settlement funding can serve as a valuable tool to maintain financial stability while pursuing justice through the legal system.

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This content was written by AI and reviewed by a human for quality and compliance.