Pre-settlement photo: See how pre-settlement funding can make a difference.

See how pre-settlement funding can make a difference.

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Use Pre-Settlement Funding To Avoid Default

Settling a legal claim can take time. Most cases are settled before going to trial, but the process can take months and if your case goes to court, it could take even longer before you receive your verdict. Your lawyer will try to close the case as quickly as they can, but there’s no easy way to predict how long a claim might take.

While you’re waiting for your case to settle , you still have to find a way to pay your bills. If you suffered a personal injury that took you out of work, waiting for a settlement or court judgment might mean you quickly burn through whatever savings you have. Even basic costs like groceries and rent add up.

To help cover costs, some people take out a loan or pay for things on their credit card. In the short term, this might work, but it means taking on a lot of debt. Not only will this get expensive to pay off, but it could hurt your credit score. One of the things that affects your credit score is the total amount of debt you have vs. the amount of credit you have available. Maxing out a credit card reduces your credit and increases your debt. Low scores make it harder to take out loans or apply for mortgages in the future and rebuilding a bad credit rating can take years.

More importantly, once you max out your credit, you might not have the money you need to make every payment. This could put you in default, which not only ruins your credit, but could carry other potential financial problems. One of your options to avoid default is to sell a portion of your future settlement proceeds for a cash advance. Here are a few other ways that you can make what money you have last longer.

Consider Deferring Student Loans

If you have federal student loans, you may be able to defer making payments on them for up to three years. During deferment, you don’t have to make your monthly payments and in some cases, the federal government may make the interest payments for you. This extends the amount of time you’ll be paying back your loans, but it gives you more money to work with each month. You have to apply for deferment, but you might be able to get approved if you’re currently unemployed. Some private student loans also offer deferment, so be sure to check with your loan company.

If you don’t qualify for deferment, you might be able to put your loans into forbearance. Like deferment, you must get your request approved, but this can help you put off having to make these payments. The loans will still charge interest, but it’s added to your balance.

These deferment and forbearance options were designed for students who are either still attending school, or recent graduates still looking for a job. However, if the injury you suffered took you out of work, you could be able to get approved. If you have student loans, be sure to check with your lender to learn what options they have available to you.

Negotiate Smaller Payment Plans

If you have debt that’s not from student loans, finding ways to cover the payments can be more difficult, but not impossible. One thing your credit card or loan company won’t tell you is that most of them have some way to give people who are unemployed or struggling financially options with their payments.

Each company can have a different name for their policy, but they’re most commonly known as hardship programs. If you qualify, you could temporarily reduce or suspend your payments for a certain period until you get your finances under control.

Before you accept a hardship offer, be sure to look at how it can potentially impact your credit. Depending on the company you borrowed the money from, applying for hardship could decrease your credit score, increase the interest rate on your debt, or have a fee added to your balance. Not every program will have these negative impacts, but some might. Make sure to read what you’re signing so you can plan for it.

Medical Bills

Hospital bills can cost a lot of money, but many hospitals have plans in place to help you manage your payments. While you wait for your claim, contact the hospital and ask them if you can negotiate a payment plan that’s manageable for your budget. Each office can have different ways to figure out what plan to offer, but if you qualify they can help you avoid default.

Research Consolidation Options

Instead of having multiple loans, you take out a new loan that’s large enough to cover your remaining debt. Then, you only have a single debt payment each month.

Some consolidation options might reduce the amount you have to pay each month by extending how long you have to pay it back. For example, one common way to consolidate debt is to refinance your mortgage and use some of your equity to pay off your other bills. Your new mortgage will give you 15 or 30 years to pay what you borrowed back, meaning your per month cost will be lower.

Debt consolidation can decrease the risk of defaulting on your payments or falling further into debt.

Get Pre-Settlement Funding

Pre-settlement funding can help you avoid default by giving you cash to cover costs until your claim is settled or a court renders a verdict on your case. After contacting Peachtree Financial, we’ll connect you with a company who could offer to purchase a portion of your expected settlement proceeds in exchange for cash now. Then, you can pay your bills and give your lawyer the time they need to argue your case.

One potential advantage of pre-settlement funding is that it helps you avoid taking on more debt. You’re spending your own money, not borrowing it from someone else. Pre-settlement funding is not a loan, it’s an advance on your expected settlement.

If you have a pending claim, contact us today. We can give you more information about your options concerning pre-settlement funding.

Peachtree Financial does not offer legal, tax, or financial advice. Please contact independent professionals for those services.

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