How Does a Settlement Advance Work?

If you’ve been in a car accident, or if you’ve been the victim of a workplace incident, you may be seriously personally injured. If you take legal action with a good lawyer on your side, you’ll be in a position to win a settlement that can help you cover the costs of hospital bills, physical therapy, your lost wages, and more. But there’s a catch – it can often take weeks, or even months to get your settlement money. In addition to going through the evidence-gathering phase and the negotiation process, it’s probably going to be at least six weeks after signing the final paperwork before seeing the funds.

So is there an alternative?

The short answer is yes. You can seek a settlement advance to get your funds early – but before you pursue this course of action, there are some important things you need to know.

The Basics of a Settlement Advance

According to, settlement advances go by many names. Depending on who you talk to, you may hear them called lawsuit funding, legal financing, or settlement loans. They all refer to the same process. As a plaintiff, you’ll be expecting settlement money at some point. By working with a settlement advance company, you’ll be able to get access to those funds much quicker – sometimes instantly. Then, when the settlement comes in, you’ll be responsible for paying back what you borrowed, plus a small fee for the transaction.

Additionally, if you don’t end up receiving a settlement, you won’t owe anything to the lender. During the review process, the settlement advance provider will review your case to determine its likelihood of success. They will likely only fund cases with a strong chance of winning.

There are many benefits to this arrangement, including:

  • Instant financial relief. The biggest benefit is the instant injection of capital you’re going to receive. If you’re like most people who have been recently personally injured, you’re struggling financially in several ways. You have mounting hospital bills and medical costs to cover. You’re still responsible for your typical expenses, like your mortgage payment and weekly groceries. And on top of that, you may not be able to work like you did before. Getting access to money early can put all those financial stressors to bed.
  • Peace of mind. Settlement advances can also give you peace of mind. Many people in this situation wonder whether their case truly has a chance of winning, and whether they’re actually going to see any settlement money at the end of it. If, after thoroughly reviewing and analyzing your case, your settlement advance provider finds that your case has a strong enough chance of winning to justify funding it, you can sleep well at night.
  • Reduced stress. The impact of stress is hard to overstate. On top of dealing with physical pain and emotional trauma from the accident that injured you, you’re going to be dealing with financial woes, a stressful negotiation, and an entirely new lifestyle. Getting an advance on your settlement can help you lower your stress – and take one step closer to going back to living a normal life.

What to Look for in a Settlement Advance Company

That said, not all settlement advances are worth the effort. Before choosing to proceed with a settlement advance, make sure you look for a provider that offers the following:

  • A fixed fee, rather than an interest rate. Some settlement advance providers charge an interest rate on their advances, like a conventional loan. If you’re not in good financial standing, the compounding interest can be devastating, causing you to owe more than you initially borrowed. Avoid this by seeking a lending provider who charges a fixed fee, rather than an interest rate (and make sure you know what that fee is).
  • No financial responsibility if you don’t win a settlement. Even the most promising cases can sometimes fall through. Most lawsuit lenders have structures in place to mitigate fiscal responsibility in the event you don’t win the case. Make sure this is in place so you aren’t required to pay the loan back if you don’t win the settlement.
  • A good reputation and solid history. Conduct some research to learn more about the settlement advance provider in question. Are there reviews and testimonials from people who have used this lender in the past? Does your lawyer speak highly of them? What is their reputation like?

Not all personal injury cases will require a settlement advance. But if you’re struggling financially, if you’re especially stressed, or if you’re just in need of some immediate relief, it can be a lifesaver. Do your due diligence before getting a lawsuit loan of your own, but keep it in mind if you’re ever in this position.