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After winning your case, your attorney’s office receives the settlement compensation to distribute in the appropriate order. First, Signature settlement Funding is reimbursed the amount it advanced to you, as well as any fees and interest that were outlined in your cash advance agreement.
Next, the attorney’s office takes its fees based on the compensation structure you agreed to when they took your case. Then the settlement funds are used to pay off any outstanding medical liens, if your case requires. After all of the above are reimbursed, you receive the remaining funds from your lawyer for your own use.
When researching your options, determine whether the company is a broker or a direct funder. A broker evaluates offers from multiple funders to provide you with options. The downside is that they charge a fee for this service. You can avoid those extra costs by working with a direct funder.
All pre-settlement funding companies charge some type of interest on a settlement cash advance. Interest rates vary from case to case, depending on the details specific to your situation. That’s why SSF wants to talk to your lawyer and get a sense of the expected outcome. The riskier the outcome of your case, the higher interest rate is charged.
There are two ways in which a pre-settlement funding company can charge interest: simple or compounding. With simple interest, any interest charged only applies to the original advance amount.
With compounding interest, the interest is charged to the total outstanding balance — including interest that previously accrued. That typically means you’ll end up owing a larger amount than interest only applied to the original balance.
Most companies charge an application fee to review your case or a processing fee once you sign the agreement. You may also be charged a wire transfer fee by your bank when you receive the cash advance fund.
Most pre-settlement funding companies offer non-recourse financing. That means you are not obligated to repay the loan if you lose your case. If you do win, then the full amount owed to the funding company (including the advance and any interest and fees) is distributed by your attorney’s office once the settlement check is delivered.