Glossary
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Pre-settlement funding can be confusing, especially if you’ve never been involved in an accident or seen the inside of a courtroom. At USClaims, we want to make sure the pre-settlement funding process—and the terms used along the way—are easy to understand.
This glossary will define many key terms you may encounter as you explore lawsuit loans.
Attorney
An attorney is a legal professional trained to interpret and apply the law to cases they are hired to litigate. Attorneys represent and advise the parties (defendant or plaintiff) involved in a lawsuit, helping them to navigate the legal system and win their case.
An attorney, oftentimes called a lawyer, generally handles criminal or civil cases and may specialize further in areas such as immigration law, family law, or personal injury law. An attorney can help you secure pre-settlement funding while they fight for a fair settlement.
Cap
A cap is a limit on something. In the context of pre-settlement funding, the cap is the most a borrower will have to repay the pre-settlement funding provider. At USClaims, we guarantee you’ll never pay more than 2x the amount of your cash advance** – no matter how long it takes to resolve your case.
Cash Advance
A cash advance is money provided to you by a funding company based on the amount you are expected to receive from your settlement.
Pre-settlement funding is a form of cash advance that is issued against a portion of your anticipated settlement amount before your case gets resolved. Once you win your case, your attorney will use your settlement proceeds to repay the advanced amount, plus agreed-upon fees and interest.
Disclosure Statement
A disclosure statement is an illustrative table used in financial documents to show the obligations over a period of time. The purpose of a disclosure statement is to provide transparency so there are no surprises at the time of repayment.
A disclosure statement may show the amount funded, the finance charge, and the total payment amount. The appearance of the disclosure statement may vary depending on your state’s laws, but the concept remains the same. As your case moves forward, the disclosure statement will inform you of your financial obligations over specified periods of time.
Lawsuit Loan
Lawsuit loan is a term commonly used to describe pre-settlement funding. However, a lawsuit loan is not a traditional loan in the legal sense because you do not have to repay a lawsuit loan if your case is unsuccessful. With traditional loan types, like personal loans, you must repay your lender regardless of your case circumstances.
Litigation
Litigation is the process of settling your case in court. The attorneys from both sides present information to a judge (and possibly a jury). Ultimately, the court will decide how much, if any, compensation you deserve.
Depending on the details of your case, litigation may drag on for a year or more. Pre-settlement funding can help you pay your bills while you’re out of work, so you don’t have to burn through all your savings or go into debt in the meantime.
Litigation Funding/Financing
Litigation funding, also known as pre-settlement funding, is a financial arrangement where a company like USClaims advances money to a plaintiff involved in a lawsuit. This funding can help the plaintiff cover medical bills and day-to-day living expenses as they wait for their case to settle. The amount the funding company provides is typically a percentage of the settlement the plaintiff expects to receive.
In return, the litigation funding provider receives a portion of the settlement if the case is successful, which repays the advance plus any interest and fees. If the case is lost, the plaintiff typically owes nothing, making litigation funding a non-recourse option.
Litigation funding is often used by individuals or businesses who may not otherwise have the resources to pursue their legal claims or wait for a fair settlement to be reached.
Non-Compounded Rates
Generally, when you borrow money, you must pay interest. There are two main types of interest rates: simple (non-compounded) and compounded.
With a non-compounded interest rate, the interest only applies to the initial amount borrowed, known as the principal. On the other hand, with a compounded interest rate, the interest applies to both the principal and the accrued interest. In other words, you pay interest on the interest.
Pre-settlement funding from USClaims features a non-compounded interest rate, which saves our borrowers money. Our fees are transparent, so you know exactly how much you’ll need to repay if you win your case.
Nonrecourse
Pre-settlement funding is non-recourse, which means you don’t have to repay the funds if you don’t win your case. A non-recourse lawsuit loan is a no-risk way to finance your life while you wait for your case to be decided.
Plaintiff
There are two parties involved in a lawsuit – the plaintiff and the defendant. As the injured party that initiated the lawsuit, you’re the plaintiff. The at-fault party that you’re suing is the defendant.
If you win your case, the defendant (or the defendant’s insurance company) must pay you a court-ordered amount to compensate you for your damages. Pre-settlement funding can help you cover your medical bills and everyday expenses as you wait for your day in court.
Post-Settlement Funding
Post-settlement funding is a cash advance of a percentage of your court-ordered settlement amount. You obtain this lawsuit loan after a settlement agreement has been reached but before the money is disbursed. When your attorney receives the settlement, they’ll repay your post-settlement funder from those proceeds.
Sometimes, there’s a large time gap (potentially months) between getting a favorable decision from the court and receiving your compensation. Post-settlement funding can help you make ends meet in the interim.
Pre-Settlement Funding
Pre-settlement funding is a cash advance of a portion of your anticipated settlement amount. You obtain this lawsuit loan after you file a lawsuit but before a judge decides your case. If you win, your attorney will repay your pre-settlement funder from the settlement proceeds.
Your lawsuit could take a year or more to resolve. Pre-settlement funding can help you pay your bills in the meantime.
Settlement Advance
A cap is a limit on something. In the context of pre-settlement funding, the cap is the most a borrower will have to repay the pre-settlement funding provider. At USClaims, we guarantee you’ll never pay more than 2x the amount of your cash advance** – no matter how long it takes to resolve your case.
A cap is a limit on something. In the context of pre-settlement funding, the cap is the most a borrower will have to repay the pre-settlement funding provider. At USClaims, we guarantee you’ll never pay more than 2x the amount of your cash advance** – no matter how long it takes to resolve your case.
A cap is a limit on something. In the context of pre-settlement funding, the cap is the most a borrower will have to repay the pre-settlement funding provider. At USClaims, we guarantee you’ll never pay more than 2x the amount of your cash advance** – no matter how long it takes to resolve your case.
Still Have Questions?
Pre-settlement funding is a complex topic. If you want more in-depth answers to specific questions, check out our Frequently Asked Questions page. You can also contact us to discuss your specific situation.
Disclaimer: Throughout this website, the term “loan” may be used for convenience to describe pre-settlement funding. However, such transactions are not loans in the legal sense. Repayment is strictly contingent upon the successful resolution of your case. If your case is unsuccessful, no repayment is required. Common terms like “lawsuit loan” are used colloquially but misrepresent the non-recourse nature of pre-settlement funding.
