Using Pre-Settlement Funding for Expenses while Awaiting Personal Injury Claim Settlement
When you’re in the midst of a personal injury case and are struggling to make ends meet, securing pre-settlement funding, using financial aid like loans, might be an option. A pre-settlement loan, also referred to as lawsuit advance funding, can help accident victims who are seriously injured, unable to return to work, and have no other resources available for living expenses while awaiting their personal injury claim to settle.
It’s important not to jump into any loans or agreements, though, without first knowing how they work, the pros and cons, and speaking to your attorney about it.
How Pre-Settlement Loans Work
Some finance companies offer funding for personal injury accident victims who are in the middle of a lawsuit. Eric Schuller, director of government affairs at Oasis Legal Finance explains on Fox Business: "Over 85 percent of the funds we give to consumers go to pay immediate household needs, such as the mortgage, rent, car payments, and putting food on the table. It is used to keep them above water until they wait for the outcome of their legal claim."
After the funding application process, the company will estimate the value of the claim and then provide the client with a cash advance. The clients must then pay back the “loan" (although it’s not really legally considered a loan; it’s “funding") upon a successful settlement, along with hefty fees.
When victims go through the application process, the company will:
· carefully review the case;
· speak to the applicant’s attorney;
· determine the potential for a successful outcome for the case; and
· offer funding options accordingly.
Types of Cases Suitable for Settlement Loans
Any type of case that will result in a fairly large settlement may be a candidate for pre-settlement funding. Most lawsuit advance funding companies accept cases such as:
· car accidents;
· bike accidents;
· truck accidents;
· motorcycle accidents;
· wrongful death;
· injuries to children;
· pedestrian accidents;
· product liability;
· medical malpractice;
· slip and fall accidents; and
· traumatic brain injury cases.
Understanding the Pros and Cons of Lawsuit Advance Funding
If you are currently considering a settlement loan, it’s important to fully understand the pros and cons before rushing into any funding options.
The most obvious benefit is that this type of funding will enable you to pay your bills until your case is settled. If you have exhausted all your other resources, a loan could help you stay afloat financially.
Another benefit is that victims will have a little more staying power and may be less likely to rashly settle on a lower offer because of financial desperation. Schuller explains: "These funds allow consumers to get a just and fair settlement instead of pennies on the dollar. We allow a consumer the ability to not have to decide [between] a lowball offer and putting food on the table or paying the electric bill."
However, there is harsh criticism of lawsuit loans amongst lobbyists who are fighting to have the industry better regulated. The fees are often exorbitant, sometimes 60 to 100 percent or more annual interest rate, according to Fox Business.
Fortunately, if you don’t win your case, you will not be obligated to pay back the funding company. To explore your legal options, contact accident attorney D.J. Banovitz, who serves clients in and around the Denver area. We can schedule a FREE consultation and determine if we may be of assistance to your case. Call 303-300-5060 today.