Accident related injuries can throw one’s life into a state of disarray. Not only do they affect the victim, both physically and emotionally, they can also cause considerable financial strain on the entire family. Injury victims often find themselves unable to work for extended periods of time, or might even lose their job. An accident related death can result in the permanent loss of a main “breadwinner.”
When accident victims are under severe financial stress, they are often at their most vulnerable because of their immediate financial need. Unfortunately, there are companies that are willing to take advantage of this financial strain by offering so-called “pre-settlement loans”.
Pre-settlement loans are meant to help the accident victim until their case is resolved, but come at a high price. Because lawyers are forbidden by the Professional Rules of Conduct from loaning money to their clients, and many clients are unable to get loans from more conventional sources, these companies have stepped in to fill the void.
By accepting a pre-settlement loan, you are giving the lender a lien against your settlement, and the right to first payment out of any recovery you might obtain. While they may solve an immediate cash flow issue, they typically come with origination fees, exorbitant interest rates, and often result in a payback, three times higher than the original loan itself.
If you are in an accident, and your financial situation requires you to consider a pre-settlement loan, it is imperative that you fully understand the consequences of this arrangement. Although we work hard to get the maximum recovery in the shortest period of time, the timing of each client’s settlement is often controlled by outside forces, including waiting for injuries to reach maximum medical improvement and obtaining the necessary report from a doctor. At Nelson Personal Injury, we discourage our clients from entering into pre-settlement loans, unfortunately however, they are often the only choice left for a financially desperate client. If you have been in a motor vehicle accident and are considering a pre-settlement loan, contact us today for a free consultation.