Nobody intends to get hurt in an accident, but when it happens, it can throw you for a loop. Everything about life changes in seconds, and the effects are far reaching. It can take months, sometimes years to reach a settlement in a personal injury lawsuit, but the rest of the world doesn’t stand still while you wait for resolution.
You might have considered getting a pre-settlement loan to bridge the gap. They’re also sometimes called injury loans, lawsuit loans or case loans. We can’t tell you whether getting one or not is a good idea, because we don’t know your personal situation. We also aren’t endorsing any companies that offer those types of loans. But we can answer some of the most frequently asked questions to help you make your own decisions.
What is a Pre-Settlement Loan?
A pre-settlement loan is like a cash advance based on the assumption you’re going to receive a settlement in your personal injury case. Often individuals know they were hurt, they know someone else caused the injury, evidence exists and a settlement is in the works. It’s just a matter of time.
A pre-settlement loan is different from a traditional loan where you always have to pay back the principal with interest. In many cases people aren’t required to pay their loan back if they lose their case.
Why do People Get Pre-Settlement Loans?
People typically get injury loans because they’re struggling to make ends meet while they wait for a reasonable settlement offer. They might have been hurt in an auto accident, slip and fall accident, oilfield accident, fire or explosion or have been prescribed dangerous drugs.
Their injury might have made it difficult to work, ruined relationships, harmed their mental health and caused ongoing hardship. They might need money to pay financial obligations and not be able to wait until all parties agree on fair compensation.
Can Lawyers Give Pre-Settlement Loans?
Lawyers can’t loan clients money, but there are companies that specialize in providing pre-settlement loans.
How do Injury Loans Work?
With regular loans, you go through an application process and the lending institution reviews your information to see if it makes sense to provide the money you’re asking for. If you qualify, they supply a portion of the loan’s value. For example, if you’re applying for a home loan, your bank might ask you to put 20 percent down and provide the rest of the purchase price. After that, you make payments and interest.
With a pre-settlement loan, you’ll need to first get legal representation (be working with a personal injury lawyer), then reach out to a reputable funding company. Their representative will go through similar steps to those followed by a typical loan officer to evaluate the strength of your case and the amount of money you might expect to receive. Then they’ll tell you how much money you might receive and how much you will need to give them in return.
You’ll need to review that agreement with your attorney, because your settlement, once reached, will go to him or her. Your lawyer can answer any questions about how the process will work so you know what to expect. Just because you applied for this type of loan doesn’t mean you have to take what they offer, always weigh what’s best for you in the long term.
What Are Pre-Settlement Loan Alternatives?
Sometimes what loan companies charge seems like too much. If that’s the case, you have other options. You might be able to go through your health insurance instead of auto insurance for ongoing medical needs. Sometimes applying for a low interest credit card can get you through a few tough months. While it’s tough to ask family members for a loan, many find because of the circumstances surrounding their injury, family members are more than happy to help. It also doesn’t hurt to check personal loan rates, just in case that type of loan is more cost effective.
Monsour Law Firm attorneys are here to help you through a difficult time. We’re available to talk about your concerns and help you understand what might be ahead. If you’ve been injured, schedule your free consultation online by clicking here.