Medical liens and pre-settlement legal funding are two distinct financial tools available to plaintiffs who are pursuing legal claims. While both can provide much-needed financial support during a legal battle, they differ in terms of how they are secured, repaid, and impact the plaintiff’s financial future.
If you’ve been seriously injured in an accident and are pursuing a personal injury claim, you may be facing significant medical bills and living expenses while you wait for your case to settle. What exactly is the difference between these two funding solutions?
What is a Medical Lien?
Essentially, a medical lien is a legal claim that a healthcare provider can place on a plaintiff’s future settlement or judgment to secure payment for medical services rendered. This type of lien is often used when a plaintiff is unable to pay for their medical treatment upfront and allows them to receive the care they need while their case is pending.
How Medical Liens Work
A medical lien is an agreement where doctors and hospitals treat you now and get paid later from your settlement proceeds. The medical provider files a legal claim against your future settlement funds, ensuring they will be compensated for the care they provide.
According to Mark Berookim, a principal and co-founder of High Rise Financial LLC, medical liens are similar to pre-settlement funding but focus exclusively on covering medical expenses.
Unlike pre-settlement funding, where the money can be used freely, a medical lien ensures that the funding company pays only for medical care and is repaid from the final compensation package. This is similar to health insurance, where any compensation for medical expenses later goes to the insurer, who initially covered the costs.
Pros and Cons of Medical Liens
The main advantage of a medical lien is that it allows you to get the medical treatment you need with no upfront cost. You can focus on your recovery without worrying about how to pay for surgeries, rehabilitation, or other necessary care.
However, there are some drawbacks to consider. Liens must be paid back in full from your settlement before you receive any remaining funds. This means your final payout could be significantly reduced, especially if you require extensive medical treatment.
What is Pre-Settlement Legal Funding?
Pre-settlement legal funding is a type of financing that provides plaintiffs with a cash advance against their expected settlement or jury award.
Unlike medical liens, pre-settlement funding is not tied to specific medical expenses and can be used to cover a wide range of costs, including living expenses, legal fees, and other bills.
How Legal Funding Works
Pre-settlement legal funding, also known as a lawsuit loan, is a cash advance against your future settlement award. The funds can be used for any purpose, including paying medical bills, covering living expenses, or hiring an attorney.
Approval is based on the merits of your case rather than your credit history. If the funding company believes you have a strong claim, they will offer you a cash advance that can range from a few thousand to over a hundred thousand dollars, depending on the specifics of your case.
Pros and Cons of Legal Funding
One of the biggest advantages of pre-settlement funding is that it provides immediate cash to help you cover expenses while your case is pending. This can be a lifeline if you’re unable to work and facing mounting bills.
Another benefit is that you only have to pay back the advance if you win your case. If you lose, you owe nothing. The funding company assumes all the risk.
The main drawback is that legal funding can be expensive. Fees are often high compared to other financing options, and the amount you have to pay back can grow substantially over time.
Key Differences Between Medical Liens and Legal Funding
While both medical liens and legal funding can provide much-needed financial assistance for personal injury plaintiffs, there are some key differences to be aware of:
- Purpose: Medical liens are specifically for medical treatment costs, while legal funding can be used for any expense, medical or otherwise.
- Repayment: Liens must be paid in full before you get any settlement money, but with legal funding, the company gets a percentage of your final award.
- Approval: Liens are offered based on your treatment needs while funding approval depends on the strength of your legal case.
- Cost: Medical liens have no added fees, while legal funding costs depend on how much risk the company is taking and how long they expect your case to last.
Want to Know? Lawsuit loans vs legal funding, what’s the difference?
Which Option Is Right for You?
So which is the better choice – a medical lien or pre-settlement funding? The answer depends on your specific needs and situation.
A medical lien makes sense if you require significant treatment and don’t have insurance or can’t afford the upfront costs. It ensures you can get the care you need to recover from your injuries.
On the other hand, pre-settlement funding may be a fit if you’re concerned about your day-to-day living expenses, like mortgage payments, groceries, or utility bills. The cash advance can help you stay afloat financially while your case moves through the legal process.
In some cases, using both a medical lien and legal funding may provide the best outcome. We may be biased, but we recommend discussing your options with your attorney so you can make an informed decision.
Key Takeaways on Medical Liens vs Legal Funding
Both medical liens and pre-settlement legal funding can be valuable tools for accident victims pursuing personal injury claims. The key is understanding how each one works and its pros and cons.
Medical liens assist with getting the treatment you need, while legal funding helps cover other important expenses while your case is pending. Liens have priority when it comes time for repayment from your settlement, but funding companies are often more flexible with how much they will advance you.
In our experience, many plaintiffs find that utilizing one or both of these options can make the difference between accepting a lowball settlement offer out of desperation and holding out for full and fair compensation. But every case is different!
If you have questions about whether a medical lien or legal funding could help in your situation, the loan representatives at Mayfair Legal Funding can help. We offer free, no-obligation consultations and will work with you to find an affordable solution. Call us today at (888) 357-1338 to learn more!
Get Help with Medical Liens and Pre-Settlement Funding
If you need assistance with medical liens, pre-settlement legal funding, or figuring out which option is best for you, Mayfair Legal Funding is here to help. Our caring team will review your case for free and find a funding solution that meets your needs.
We understand how stressful it is to be injured and facing an uncertain legal outcome. Let us take some of that burden off your shoulders, so you can focus on what matters most – your health and recovery. Apply online or call (888) 357-1338 to get started today. You could have funds in your account in as little as 24 hours!
