Personal injury cases are rarely a slam and dunk deal. While your claim may settle, it could take months or years for the case to run its course and the court to award a settlement. Meanwhile, your bills and other financial obligations will continue to pile, especially if you can’t work due to your injuries. How do you meet these expenses that can’t wait for you to receive your settlement?
Contact our Los Angeles Personal Injury Attorneys with El Dabe Ritter Trial Lawyers if you have sustained a personal injury.
What Is a Pre-Settlement Loan?
The term ‘loan’ can be misleading because a pre-settlement loan is not a traditional loan but rather a cash advance on your potential personal injury settlement. Generally, a creditor offers you a percentage of your projected settlement at an interest, which you pay back when your case settles. You may or may not be required to pay back if you don’t get a settlement, depending on your agreement.
The amount provided as a pre-settlement loan is usually a percentage of your estimated settlement, with typical values ranging from 10 to 15 percent. However, amounts will vary and may depend on several factors, such as:
- The facts of your case
- The estimated value of your settlement
- Your insurance coverage limits
- The creditor’s confidence in the defendant’s liability for your injuries
- The loan company you are dealing with
It is important to be keen when reading the terms of the loan. Generally, pre-settlement loans carry an annual interest of between 20 to 60 percent that could be simple or compounded.
What If You Can’t Pay Back the Loan?
Your personal injury lawsuit could go one of three ways, you could recover enough money to pay back the loan, obtain a recovery not enough to repay the loan, or recover nothing. In the last two scenarios, you may need to worry about your creditor. Some lenders take the loss while others may still require you to repay the advance.
Before accepting a pre-settlement loan, read the fine print, ask questions, and discuss the possible benefits and repercussions with your attorney.
Alternatives to Pre-Settlement Loans
A pre-settlement loan could be an attractive option if you desperately need to pay your bills and have no other way of getting money. However, considering the interest rates, most personal injury attorneys recommend other more affordable options, such as:
- A personal loan from a bank
- A home equity line of credit
- Credit cards
- Cash advances on credit cards
If you don’t qualify for the above, you could loan money from friends or family who understand your current situation. You could also discuss the possibility of a medical lien with your doctor and attorney.
Talk to a Los Angeles Personal Injury Attorney
The decision about whether or not to turn to personal injury pre-settlement loans is a monumental one, especially because it affects your potential settlement. Before making a decision or signing any papers, discuss your financial situation with your personal injury attorney.
At El Dabe Ritter Trial Lawyers, we believe in providing a higher level of service. If you have been injured in an accident caused by another person’s negligence, we are ready to help. Contact us today at 888-544-1438 to schedule a consultation with one of our experienced Los Angeles Personal Injury Attorneys.