Pros And Cons Of Financing For Your Personal Injury Settlement

Updated on: 11/8/2019

Financial Institution or Modern Day Loan Shark?

by Mischelle Davis, Client Relations Manager, Davis Law Group, Seattle, WA

After an accident injured people frequently have steep medical bills and are unable to work.  The financial burden this creates can be overwhelming.  And unfortunately if the victims plan to file a lawsuit or have filed a lawsuit they may have to wait years before the case is resolved and either a settlement or jury award is paid.  

There ‘financial institutions’ that advertise heavily on TV and the internet offering pre-settlement funding also known as litigation financing, litigation funding, plaintiff lawsuit funding and lawsuit cash advances.  During difficult times it can be very tempting to turn to these kinds of companies for help.  

Many promise no upfront costs, no monthly payments, no credit checks, no application fees and promise that if you don’t win your case you won’t owe them anything.  But if you do win your case you will owe them the loan amount plus a ‘monthly usage fee’ for each month that the loan was outstanding.  You can be left with only a small amount of your settlement after their usage fee is paid.

Or similar companies say that they do not loan money but rather ‘invest in lawsuits’.  They give you cash up front and instead of an interest rate or ‘usage fee’ they will take a large percentage of your settlement at the conclusion of the case.  Again, you can be left with very little after their fee is paid.  

These cash advance and funding/investing promises can be alluring and tempt many to take cash now without any worry or concern for the future consequences.  

Beware.  Although there are some reputable companies that make loans to injury victims, many of these companies are little more than legalized modern day loan sharks.    

Note: It is unethical for your attorney to loan you money or pay your bills for you.  You should also beware of lawyers that promise to give you money before your case settles.  

Davis Law Group strongly discourages its clients from taking a pre-settlement loan or cash advance.  Although times are tuff and money may be tight after an injury accident patience and perseverance can pay off.  If you can find a way to make ends meet until your case is concluded then the entire settlement or award will be yours after costs and attorney’s fees are deducted.  You can end up with much more money in your own pocket when you don’t have to pay a lending institution costly fees.

Some doctors and clinics will agree to wait until the conclusion of a case before getting paid if they know a reputable personal injury attorney is representing you.  And family members can be more open to making no-interest loans when they know that a lawsuit is pending.  Explore all of your options and speak to your attorney before making the decision to seek a lawsuit cash advance or litigation financing.