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What is Post-Settlement Funding?
by
JG Wentworth
•
June 17, 2025
•
7 min
Post-settlement funding represents a financial solution for individuals who have won a legal settlement but face delays in receiving their awarded funds. This funding mechanism provides immediate access to a portion of settlement money while plaintiffs wait for the often lengthy process of final payment distribution. If you have been awarded a settlement but can’t wait for it to be paid out, read on…
Understanding post-settlement funding
Post-settlement funding, also known as settlement funding or structured settlement funding, is a financial service that allows settlement recipients to access their awarded money before the standard payment schedule begins. Unlike pre-settlement funding, which provides advances during ongoing litigation, post-settlement funding occurs after a case has been resolved and a settlement agreement has been reached.
The fundamental concept revolves around the reality that legal settlements, particularly large ones, often involve significant delays between the agreement and actual payment. These delays can stem from various factors including:
- Administrative processing
- Appeals periods
- Insurance company procedures
- Structured payment arrangements
During this waiting period, plaintiffs may face immediate financial pressures that cannot wait for the settlement funds to arrive.
How post-settlement funding works
The process of obtaining post-settlement funding typically follows a structured approach.
- Initially, the plaintiff or their attorney contacts a funding company and provides documentation proving the existence and terms of their settlement. This documentation usually includes the settlement agreement, court orders, and verification from the attorney handling the case.
- The funding company then evaluates the settlement details, including the total amount, payment schedule, and the reliability of the paying party. Based on this assessment, they determine how much immediate funding they can provide, which is typically a percentage of the total settlement amount. The evaluation process considers factors such as the strength of the settlement agreement, the financial stability of the defendant or their insurance company, and any potential complications that might delay payment.
- Once approved, the funding company provides immediate cash to the plaintiff in exchange for an assignment of a portion of their future settlement proceeds. When the settlement funds eventually arrive, the funding company receives their portion directly, including their fees and any agreed-upon returns on their investment.
Types of post-settlement funding
Post-settlement funding comes in several forms, each designed to address different circumstances and needs.
- Lump-sum funding, where plaintiffs receive a single payment representing a portion of their expected settlement. This option works well for individuals facing immediate large expenses or those who prefer to manage their finances with one substantial payment.
- Structured settlement funding, which applies when the original settlement was arranged as a series of payments over time. In these cases, funding companies can purchase some or all of the future payments, providing immediate cash in exchange for the right to collect those future installments.
- Partial funding arrangements, where plaintiffs can access different portions of their settlement at various times. This flexibility allows for more strategic financial planning and can be particularly useful for managing ongoing expenses while preserving larger portions of the settlement for future needs.
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Perks of post-settlement funding
Some of the main reasons why getting a portion of your settlement cash sooner than later works in your favor:
- Immediate financial relief for plaintiffs who often find themselves in situations where they cannot wait months or years for settlement funds to arrive. Medical bills may be accumulating, mortgage payments might be at risk, or other critical expenses could threaten financial stability. Post-settlement funding addresses these immediate needs without requiring traditional loan applications or credit checks.
- The non-recourse nature of many post-settlement funding arrangements. Unlike traditional loans, if complications arise and the settlement funds never materialize, the plaintiff typically is not personally liable for repaying the advance. The funding company assumes the risk that the settlement might not be collectible.
- The speed of the funding process also represents a major advantage. While traditional loans might take weeks or months to process, post-settlement funding can often be arranged within days once proper documentation is provided. This rapid access to funds can be crucial for addressing urgent financial needs.
- Financial flexibility that allows plaintiffs to make better long-term decisions. Rather than accepting a potentially lower settlement offer due to immediate financial pressure, having access to post-settlement funding can enable plaintiffs to wait for full payment of a more favorable agreement.
Risks and considerations
Despite its benefits, post-settlement funding involves several important risks and considerations that you should keep in mind.
- The cost associated with these services is a primary concern. Funding companies charge fees that can be substantial, sometimes resulting in the plaintiff receiving significantly less than their full settlement amount. These fees are typically structured as a purchase price discount, meaning the funding company pays less than the face value of the settlement portion they’re acquiring.
- The complexity of funding agreements presents another risk. These contracts can include various terms and conditions that may not be immediately apparent to plaintiffs. Understanding the full implications of these agreements requires careful review, preferably with legal counsel, to ensure that the arrangement serves the plaintiff’s best interests.
- The risk of overcommitting settlement funds. Some plaintiffs may be tempted to access too much of their settlement through funding arrangements, leaving insufficient funds for long-term needs. This is particularly concerning for settlements intended to provide ongoing support for medical care or living expenses.
- Market volatility and changes in the funding industry can also impact these arrangements. Funding companies may change their terms, rates, or availability, potentially affecting plaintiffs who need additional funding beyond their initial agreement.
The application process
The main steps involved with receiving post-settlement funding include:
- Gathering comprehensive documentation about the settlement. This typically includes the settlement agreement itself, court orders finalizing the agreement, correspondence from attorneys confirming the settlement terms, and verification of the defendant’s ability to pay.
- Initial consultation where the funding company evaluates the basic details of the settlement. They assess factors such as the settlement amount, the expected timeline for payment, and any potential complications that might affect collection. This preliminary review helps determine whether the settlement is suitable for funding.
- Due diligence involves verifying all documentation, confirming the legal status of the settlement, and assessing any risks associated with the particular case. The company may contact the plaintiff’s attorney directly to confirm details and ensure there are no undisclosed issues.
- A funding offer specifies how much immediate cash they will provide and what portion of the settlement they will receive in return. This offer typically includes detailed terms about payment schedules, fees, and any conditions that must be met.
Financial planning considerations
Post-settlement funding should be viewed within the context of comprehensive financial planning. The decision to access settlement funds early should consider not only immediate needs but also long-term financial goals and stability. Settlement funds are often intended to provide ongoing support for medical expenses, lost income, or other long-term consequences of injury or damages.
- Tax implications represent another crucial consideration. Settlement funds may have different tax treatments depending on their nature and the circumstances of the case. Accessing funds through post-settlement funding arrangements might affect these tax considerations, making consultation with a tax professional advisable.
- The impact on government benefits should also be evaluated. Large lump-sum payments from settlements can affect eligibility for various government assistance programs. Understanding these implications before accessing settlement funds can help avoid unintended consequences.
- Estate planning considerations may also come into play, particularly for larger settlements. The structure of settlement payments and the timing of their receipt can impact estate planning strategies and the financial security of beneficiaries.
The bottom line
Post-settlement funding serves as an important financial tool for individuals navigating the often lengthy process of collecting legal settlement funds. While it can provide crucial immediate relief for pressing financial needs, it comes with costs and considerations that require careful evaluation. When used appropriately, it can provide valuable financial flexibility and security during challenging times. However, it should be considered as part of a comprehensive approach to financial planning that takes into account both immediate needs and long-term financial stability.
* JG Wentworth does not provide pre-settlement/lawsuit funding services. All leads are brokered to unaffiliated third party providers by Peachtree Funding Northeast, LLC.
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