When you are injured and waiting on a personal injury case to settle, financial stress can hit hard. Rent is due, bills stack up, and work may be impossible. That is when pre-settlement funding companies (also called lawsuit funding companies or settlement advance companies) step in offering fast cash. These are also sometimes called lawsuit loans, pre-settlement loans, or lawsuit settlement loans.

But while these advances sound like a lifeline, the reality is much more complicated. Here is what you need to know before signing any agreement.

What Is Pre-Settlement Funding in Florida?

In Florida, pre-settlement funding is a non-recourse cash advance. You receive money upfront and agree to pay it back from your future settlement. If you lose your case, you do not have to repay the advance.

Because it is not technically considered a loan, these companies are not bound by lending laws. This loophole allows them to charge extremely high interest rates and fees.

Why People Use Settlement Advance Companies in Florida

The main reason is survival. Clients use the money to pay for:

  • Rent or mortgage
  • Transportation or car repairs after an accident
  • Household expenses while out of work

It usually is not for medical bills, since those are handled separately at settlement.

The High Cost of Pre-Settlement Funding

Here is where the trouble starts. The interest and fees add up fast, so fast that most attorneys warn clients not to take these advances unless absolutely necessary.

One real case involved a client who borrowed around $9,000 and ended up owing nearly $40,000 just over a year later. Even after negotiating, repayment was still about $25,000, almost three times the original amount.

Another client borrowed $5,000 and, after a few years, owed $20,000. These outcomes are not rare.

Some companies cap repayment at double the borrowed amount. While still expensive, that limit is far more reasonable than companies with no ceiling at all.

Red Flags to Watch Out For

Not all pre-settlement funding companies operate the same way. Here are some common red flags:

  • Immediate markups: Some companies add 50 percent the moment you sign, even if you repay the next day
  • No repayment cap: Without a limit, debts can balloon into multiples of the original advance
  • Administrative fees: Borrow $3,000, and you may only receive $2,700, but you will owe interest on the full $3,000

How Pre-Settlement Funding Impacts Your Settlement

One of the biggest misconceptions is that the funding is extra money. It is not. It comes out of your settlement.

Here is a common scenario:

  • Settlement: $60,000
  • Attorney’s fees and costs: $20,000
  • Medical bills: $20,000
  • Repayment to advance company: $10,000

That leaves only $10,000 in the client’s pocket. It’s easy to forget they already received that $10,000 months earlier. That frustration can make cases harder to settle.

Insurance companies also never cover the interest or fees. That burden falls entirely on the injured person. In other words, you can’t ask for a higher settlement amount in order to cover the interest and fees from a lawsuit loan.

The Attorney’s Role

Most attorneys dislike pre-settlement funding, but they cannot forbid clients from using it. Attorneys often require clients to sign paperwork acknowledging how costly these agreements are.

Attorneys are not allowed to advance money directly to clients under bar rules, even if they wanted to. This limitation sometimes pushes clients toward settlement advance companies when financial pressure builds.

When possible, attorneys may negotiate down the repayment at the end of the case, but this is never guaranteed. Some companies are more flexible than others.

When Cases Get Approved

Funding companies only back cases they feel confident will result in recovery. They review:

  • Strength of liability (rear-end collisions are favored over disputed slip and falls)
  • Amount of insurance coverage available
  • Severity of injuries

If your case looks weak, you will not qualify.

Final Thoughts

Pre-settlement funding may provide quick relief, but it comes with enormous long-term costs. Clients often end up paying back double, triple, or even quadruple what they borrowed.

If you are considering it, review every detail of the contract, look for companies with repayment caps, and ask your lawyer to help you compare options. For many people, finding alternative ways to cover expenses (borrowing from family, negotiating bills, or seeking a traditional loan) can save tens of thousands of dollars in the end.