If you sustain a personal injury because another person was negligent in the state of New York, you are entitled to full reimbursement for your medical bills, lost wages, and more. But a personal injury matter often takes weeks – and sometimes takes months or longer – to resolve.
Your healthcare providers, however, may demand payment right away. If you’re seriously injured, and you can’t work, your other bills could start piling up rapidly. How can you meet your financial obligations while your personal injury case is pending? Can a Bronx car accident lawyer help?
Some personal injury victims decide to apply for and accept what’s called a “lawsuit loan.” This is a brief discussion of lawsuit loans, their pros and cons, and how they work.
WHAT’S THE FIRST THING TO KNOW ABOUT LAWSUIT LOANS?
If you choose this option, you need to be careful. The interest or “fee” for a lawsuit loan can be exceedingly high.
Lawsuit loans offer relief to the injured victims of negligence while a personal injury claim is being resolved. Speaking precisely, a lawsuit loan isn’t really a “loan.” It’s more like an advance against the compensation you expect to receive in an out-of-court settlement or a jury award.
In fact, lawsuit loans are sometimes advertised as “pre-settlement funding” or as “lawsuit cash advances.”
HOW LONG CAN IT TAKE TO RESOLVE A PERSONAL INJURY CASE?
Personal injury matters often take months to resolve, and the most complicated cases can take a year or more. Your accident attorney may be engaged with an insurance company in complex negotiations.
If your case goes to trial, the discovery phase alone can take months before any trial actually commences. All this time, if you’re unable to work, your bills keep arriving. Your financial obligations aren’t put on hold because you’ve been injured.
Obtaining a lawsuit loan based on your personal injury case is not difficult. You can find the lenders easily online, and their advertising is on television and billboards everywhere.
WILL YOUR LAWYER BE INVOLVED WITH YOUR LAWSUIT LOAN?
To qualify for a lawsuit loan, your accident attorney’s cooperation will be needed. A lender will want to review the details of your case and may even need to speak with your lawyer.
But even discussing your case with a lender risks a violation of the attorney-client privilege, so many Bronx personal injury attorneys strictly advise against lawsuit loans.
Attorneys are firmly committed to a client’s confidentiality, and handing over files or discussing details of the case with an outside third party is something that attorneys strongly resist. A lawyer’s duty is to protect the client.
If your attorney cooperates, he or she must agree to ensure that the lender gets paid before you receive what’s left of your settlement or jury award, and you’ll both have to sign that agreement.
But even if your lawyer has your consent to speak with a lender, and even if your lawyer agrees to cooperate, a lawsuit loan still may not be the best idea – or even your best option. Keep reading for an explanation of how lawsuit loans work – and for a look at your other options.
HOW DO LAWSUIT LOANS WORK?
When you obtain a lawsuit loan, your personal injury compensation functions as the collateral. There is usually no credit check, and you probably won’t even have to be employed. As long as your personal injury settlement or verdict is enough to pay off the loan, it will probably be approved.
You can apply for a lawsuit loan online. After reviewing the details of your case and speaking with your accident attorney, if the lender believes that your personal injury claim will prevail, you’ll receive the loan almost immediately.
The typical lawsuit loan is for ten percent of what the lender thinks you will receive in a settlement or verdict. If the lender thinks you’ll get $50,000, the lender will probably offer to loan you $5,000.
If your claim does not prevail and a jury awards you nothing, you’ll owe the lender nothing for the lawsuit loan. This happens rarely, but it’s the risk the lender takes, and it’s the ostensible reason why the interest rate or “fee” for a lawsuit loan is so excessive.
HOW HIGH IS A LAWSUIT LOAN’S “FEE” OR INTEREST RATE?
Lawsuit loan lenders are not regulated by state or federal law, so they’re allowed to charge genuinely exorbitant rates – in some cases as much as fifty percent annually.
While a lawsuit loan may give you more time to negotiate for a better settlement, the increasing amount that you’ll owe might, on the other hand, pressure you into settling your claim too soon.
WHAT ARE YOUR OTHER OPTIONS FOR QUICK CASH?
If you are injured by someone else’s negligence in the New York City area, and you seek compensation with a personal injury claim, consider these other options for immediate cash before you agree to a lawsuit loan:
1. Can any of the insurance policies pertinent to the case offer quick cash?
2. Do you qualify for any state or federal disability benefits?
3. What about a personal loan – at a better rate – from your bank or credit union?
4. Could you borrow from a friend or family member?
When your case is finally resolved, you’ll pay your lawyer’s fees and expenses. If you were seriously injured, you may have to pay medical liens. And if you took a lawsuit loan, that must be paid as well – before you see the first dollar of your compensation.
WHAT ELSE SHOULD YOU KNOW IF YOU SEEK A LAWSUIT LOAN?
1. Find a lender offering the lowest rate. Make sure that all rates, costs, and “administrative fees” are disclosed. If you do not fully understand the interest rate and how the interest is calculated, do not move forward with the loan.
2. Avoid loan brokers. These operations charge even higher fees. Deal directly with a personal injury lawsuit loan company.
3. Don’t sign any documents until your attorney has reviewed everything and advised you regarding the loan.
4. Adhere to your lawyer’s advice. Your lawyer is advocating for you and protecting your interests – even if you don’t like the advice.
Lawsuit loans are risky. If the resolution of your case takes more than a year, you could end up paying back twice what you borrowed – or more. If you have any other option for cash while your personal injury claim is pending, take it.
WILL YOU RISK ANYTHING IF YOU TAKE LEGAL ACTION?
But you won’t need to risk anything to pursue justice. An experienced Bronx personal injury attorney can offer you a first consultation at no charge if you’ve been injured by another person’s negligence.
At that consultation, your attorney will review your case and explain where you stand legally. If you decide to take legal action, you will not pay an attorney’s fee until you receive the compensation you need and deserve.
If you’re injured by negligence in any accident in the New York City area, obtain medical treatment at once – that’s the top priority. Then speak with an aggressive advocate who will fight for your rights – an experienced Bronx personal injury attorney. Your future could depend on it.