Personal Injury Loans: Frequently Asked Questions
A personal injury lawsuit can be expensive and take many years to come to a resolution. While the lawsuit is working its way through the courts, you still have expenses like a mortgage, utilities and groceries. You may be unable to work due to your injuries and you are not receiving lost wages as your case is heading to court. Personal injury loans can help you ease that burden so that you can continue to pay your regular bills while you await the outcome of the lawsuit.
Here are some of the frequently asked questions about personal injury loans on settlements.
Can My Attorney Lend Me Money?
Professional ethics prohibit an attorney from loaning money to a client against the settlement proceeds. In addition, attorneys have many clients making it virtually impossible for them to lend all of them money to cover their expenses during the case.
What Does My Attorney Have to Do with the Loan?
Your attorney must agree to cooperate with the company who lends you the money. Because the loan company has a financial interest in the outcome of the case, they will want to review your case file and discuss the aspects with your attorney. In most cases, your attorney will attempt to prevent you from taking out personal injury loans as discussing your case breaks attorney-client privilege.
How Does the Process Work?
Personal injury loans on settlements work somewhat like a payday loan in that you are borrowing against the proceeds of your settlement, much like you borrow against your upcoming paycheck with a payday loan. There is usually no credit check as the finance company simply looks at whether your settlement will be enough to repay the loan. Most companies allow you to apply online and provide information about your case. They then contact your attorney and, if your information agrees with what the attorney says, the file will be sent to an underwriter who will determine if the case is worth the loan.
How Much Can I Borrow?
Most loan companies allow you to borrow up to ten percent of what they believe your case is worth. For example, if they believe your case will settle for $50,000, they would lend you $5,000. If your case is lost, you will not owe the loan company anything as they rarely lend the money if they don’t think they will be paid.
Are There Any Disadvantages?
The loans are usually very small and come with fairly high interest rates as they are not regulated in most states. Some loan companies charge a flat fee rather than an interest rate while others may charge the interest monthly. As the interest and fees mount, you may be tempted to take a smaller settlement in order to eliminate the loan expense. When you receive your settlement, you will need to pay your attorney’s fees and costs, which can be substantial, as well as the loan plus interest. There have been people who have received no money from their settlement after taking out a settlement loan.
Other things to consider before taking out personal injury loans is to find one with a lower interest rate and make sure you know exactly how much the loan will cost. Don’t use loan brokers and don’t sign any contracts or agreements until your attorney has reviewed them.
If you have been injured and are considering personal injury loans on settlements, contact Lundy Law today to get more information. You can arrange for an initial consultation by calling 1-800-Lundy Law or completing the form on our website.