This is the one page on this site about a product that is not a structured settlement transfer, and it is here because the two are constantly confused. Pre-settlement funding is an advance against a claim that has not settled yet. A structured settlement transfer is a sale of payments from a claim that settled years ago. Different product, different risk, different price, different law.
What pre-settlement funding is
A funder advances money against a pending claim and is repaid from the proceeds if the claim succeeds. Because it is usually non-recourse - you owe nothing if the case fails - the funder is pricing litigation risk, and the cost reflects that: rates are typically far above any consumer credit product, and they compound while the case runs. No court approves the advance, because nothing has been settled yet and no payment rights exist to transfer.
How to tell which one you need
If your case has not settled, a transfer is not available to you: there are no payment rights yet. If it settled years ago into a schedule of payments, pre-settlement funding is not what you want, and a transfer - court-approved, priced at a discount, and with a written disclosure you are entitled to - will cost far less for the same cash. The vocabulary overlaps badly, so the question to ask any firm is simply: has my case settled?
What a New York court has to find
New York is the statute on this record that looks hardest at the money. The court must find the transfer is in the best interest of the payee, taking into account the welfare and support of the payee's dependants, and whether the transaction, including the discount rate used to determine the gross advance amount and the fees and expenses used to determine the net advance amount, are fair and reasonable. It also requires the payee to have been advised to seek independent professional advice and the agreement to be written in plain language.
Questions people ask about car accident lawsuit loans
Does a court really have to approve this?
Yes, in every state. The federal exception in 26 U.S.C. 5891(b) applies only where the transfer was approved in advance in a qualified order finding it is in the best interest of the payee, taking into account the welfare and support of the payee's dependents.
What is the single biggest variable in the price?
The discount rate, and after that how far in the future the payments fall due. The reported range across the market is between 9% and 18%.
Do you take a share of what I get?
No. Buyers pay a flat fee for the enquiry itself, never a share of the discount and never anything contingent on a transfer completing.