If you previously took out a pre-settlement advance to cover expenses during your lawsuit, you may be paying more than necessary. Just as homeowners refinance mortgages for better rates, plaintiffs can refinance their pre-settlement advances to reduce costs and keep more of their settlement when the case resolves.
Refinancing is one of the most underused tools available to funded plaintiffs. Understanding how it works and when it makes sense can save you thousands of dollars.
Key Takeaways
- Refinancing a pre-settlement advance means a new funding company pays off your existing advance and issues a new one with better terms.
- Plaintiffs refinance to lower their effective rate, reduce the total payback amount, or consolidate multiple advances.
- The best time to refinance is when your case has strengthened since the original funding was issued.
- Your attorney must cooperate with the refinancing process, as they hold the lien acknowledgment.
- Not every advance can be refinanced, but it is always worth exploring the option.
- You contact a new funding company and express interest in refinancing your existing advance. You provide details about your case and your current funding agreement.
- The new company evaluates your case by reviewing the claim details with your attorney, just as they would for a new funding application. They assess the case value and the outstanding balance on your current advance.
- You receive a refinancing offer that outlines the new terms, including the total amount being advanced, the rate, and the projected repayment amount.
- Your attorney reviews and approves the new agreement. Since your attorney holds the lien acknowledgment, their cooperation is required.
- The new company pays off your old advance directly, and the new agreement takes effect. If the refinancing includes additional funds beyond what is needed to pay off the old advance, those funds are disbursed to you.
- The total payback amount at various settlement timelines. A lower rate means nothing if hidden fees push the total cost higher.
- The compounding structure. Simple interest or capped compounding is generally more favorable than uncapped compound interest.
- Any additional fees for origination, processing, or administration.
- The buyout amount the new company will pay to your old funder. Make sure this amount matches what you actually owe.
What Refinancing a Pre-Settlement Advance Means
Refinancing works similarly to refinancing any other financial obligation. A new funding company evaluates your case, agrees to pay off your existing advance, and issues a new advance with different terms. The old funding company is paid in full, and you now owe the new company instead.
The goal is to end up with a lower total repayment amount when your case settles. This is typically achieved through a lower rate, more favorable fee structure, or better compounding terms.
The process does not change the underlying case or your relationship with your attorney. It simply replaces one funding agreement with a more favorable one.
When Refinancing Makes Sense
Several situations make refinancing a smart move for plaintiffs who already have a pre-settlement advance.
Your case has grown stronger. If new evidence has emerged, liability has become clearer, or your damages have increased since the original funding, your case now represents a lower risk to funding companies. Lower risk typically translates to better rates.
Your original terms were unfavorable. Some plaintiffs, especially those who needed funding urgently, may have accepted terms that were not ideal. If your original advance carries high fees or aggressive compounding, refinancing to a more competitive product can make a meaningful difference.
You have multiple advances. Some plaintiffs take multiple small advances over time, each with its own fee structure. Consolidating these into a single advance with one set of terms simplifies repayment and may reduce the total cost.
Significant time has passed. The longer a pre-settlement advance remains outstanding, the more fees accumulate. Refinancing resets the clock with a new agreement, potentially slowing the growth of what you owe.
How the Refinancing Process Works
The refinancing process is straightforward and typically follows these steps:
The entire process can often be completed within a few business days.
What to Look For in a Refinancing Offer
Not all refinancing offers are created equal. When evaluating a potential refinance, pay close attention to:
Your attorney should review any refinancing agreement before you sign. For tips on working effectively with your legal team, see our guide on [choosing a personal injury attorney](/blog/how-to-choose-personal-injury-attorney).
Can Every Advance Be Refinanced?
Not necessarily. Some funding agreements include provisions that make refinancing difficult, such as prepayment penalties or minimum holding periods. Additionally, if your case has weakened since the original funding, new companies may not offer better terms or may decline to refinance altogether.
However, it is always worth exploring the option. Even if your current funder's terms seemed reasonable at the time, the market may have shifted, or your case circumstances may have improved in ways that make better terms available.
How Frontier Legal Funding Can Help
Frontier Legal Funding regularly works with plaintiffs who are looking to refinance existing advances from other companies. The team evaluates each situation individually, looking at the current outstanding balance, the strength of the case, and the terms of the existing agreement to determine whether a refinance will genuinely benefit the plaintiff.
If you have an existing pre-settlement advance and want to explore whether refinancing could save you money, visit [frontierlegalfunding.com](https://frontierlegalfunding.com) or call (855) 385-FUND for a free, no-obligation consultation.