Why do clients request a loan?
In a personal injury case, typically, a client has suffered some type of injury. Many times this affects their stream of income due to the fact that they are unable to work for a specific time period due to the injury. In some situations a client may even have to stop working due to the injury. This is a tough spot to be in for anyone because the stream of income that has previously been provided by working is immediately lost. Other times, due to the increasing amount of medical bills that one has to pay, this will affect the net income that they have coming in due to the constant bills that one must pay. In either example, a client may be in such a dire situation that they feel the only way out is to request a loan of some sort to help them catch up.
Americans who take out loans
We live in a country where the average American depends on loans for pretty much everything. House, cars, education, vacations, credit cards, consolidation of bills, medical bills, and the list goes on. If you stop and consider the extent to which Americans do request loans, you will realize that the average American actually survives on loans. Unfortunately, this is just the way that our society is designed. According to www.finder.com, a website that categorizes the percentage of U.S. Citizens that depends on loans, it shows that in the past year, 34% (83.5 million people) of Americans have taken out loans. This is substantial especially considering that the United States is already in enormous debt. Another type of loan that has become extremely popular are personal injury loans. These are loans that a client will take out against their case, and repay once their case is settled. So as you can see, there are pretty much loans out there for every circumstance. Being that personal loans govern the everyday living of Americans, it is not hard understand why people would want to utilize this process and take out a loan to help with living expenses in a personal injury case as well.
Personal Loan Lending Agencies
I am pretty sure that you have seen the various commercials of companies that offer options to people in need of money who have a personal injury case open. As a matter of fact, over the last 15 to 20 years these companies have grown tremendously. This is due to the personal injury cases that have grown over the years as well. Some well-known companies are JG Wentworth, Mayfield Settlement Funding, Peachtree Financial, and Oasis to name a few. These particular companies market themselves as a client’s “way out to all financial trouble.” Another option for personal injury loans is for the law firm representing the client to front a specific amount of money to the client while the case is still ongoing. Once the case settles, the attorney will deduct the amount that was loaned, from the final proceeds.
To request a loan or not?
Making the decision to request a personal injury loan to assist you with living expenses is a personal decision that only a client can make. I see many clients inquiring with their firm and informing that they need a loan for rent, car payments and many other expenses. Typically, the attorney, like a personal injury lawyer Arlington TX trusts, has to approve the loan first. The client will contact the loan agency and apply for the loan. The lending agency will then contact the firm that represents the client and confirm all of the case information in order to determine whether the loan is worth approving. However, the client’s attorney must approve this before the okay is given to distribute the loan out. Many of these lending agencies charge inflated interest on these types of loans, which means that the client will actually have to repay sometimes double or triple what they borrowed depending on the interest rate. A good marketing tool that the lending agencies use is that if the client does not win their case, they will not have to pay back. However, keep in mind that usually if an attorney approves for client to get the loan, the case is somewhat decent and there is already evidence in place that some amount of money will most likely come out of a settlement.
Unfortunately, many people believe that they will get such an appealing settlement from their case that repaying the lending agency will be taken care of through the final settlement. The client actually does not take into consideration that once they receive their final settlement, they also have to pay the attorney for their services, any medical providers, and any personal loans that they took out, with interest. Based on the actual settlement amount of a case, at times, this may leave the client with little to nothing going in their pocket. So in my opinion, getting personal injury loans is a route that one should try their best to stay clear of.
The best route to take when in need of funds
People’s finances sometimes take a turn while a personal injury case is in process. If you are contemplating on seeking a lending agency for assistance, it is best to exercise all other options first. If you are able to go to your own personal bank or credit union, you will definitely get better rates. However, that is not an option for everyone. The next option would be to evaluate on whether you can get a part time job to temporarily bring in additional income. If this option is not available as well, asking family members and possibly seeing if they can provide you with a loan that you will pay back in small payments would be a last resort. All of the above options are much better options than seeking a personal injury lending company to assist with living expenses. Additionally, at the end of a case, a client will get more of their damages back, instead of a majority going to high interest rates.
Thanks to our friends and contributors from Brandy Austin Law Firm PLLC for their insight into the dark side of personal injury loans.