If you have been injured in a car accident, you might need money fast and maybe you’re curious about pre-settlement funding & lawsuit loans. To be clear, I am a car accident lawyer and cannot loan money. But, many of my car accident clients ask me about how to get loans and advances out of their case. I wrote this article to explain how car accident pre-settlement funding and lawsuit loans work. I want people to know how to get these loans, the benefits, and the risks. Since I have a lot of first hand experience with advances and loans, I wanted people to know how the process really works. If you have been injured in a car accident and have questions about how to get money before your settlement, please contact me at (727) 381-2300 immediately. Hopefully, with this information, you can make a better decision about what to do.
What are Pre-Settlement Funding and Lawsuit Loans?
Pre-settlement funding and lawsuit loans both deliver you money, but are technically different products. People use the terms interchangeably because they both send cash and charge interest the same way. Pre-settlement funding is much more common. In pre-settlement funding, a funding company gives you money in exchange for a portion of your settlement recovery. In other words, they buy a piece of your case. The money can be given at any time before your case is resolved.
A lawsuit loan applies when you have already won your case and are simply waiting on the check. It is a straight loan to you and you can pay back the loan once you receive the money from your case. A lawsuit loan is rarely used in car accident cases because once you settle, you usually get a check from the insurance within a few days.
It is important to realize that if you receive money from either of these ways, you are always responsible to repay it. That means that you are on the hook personally if the settlement or case does not pay out.
Do I Need a Lawyer Before I Can Get Money?
Yes. All funding companies will require you to have already hired a lawyer for your car accident case. There are many reasons why this is required. First, the funding company wants assurance that your claim is being handled correctly. Second, the funding company will want to confirm from your lawyer whether he/she believes that the case is worth enough to repay the loan. Next, the funding company wants a lawyer involved to help you understand the terms of the deal. Finally, they will want a lawyer present at the end of the case so that the money can be easily transferred to them out of the settlement.
What is the Best Option for Money After a Car Accident?
Pre-settlement funding is the best choice if you have been in a car accident and need money fast. There are countless companies that specialize in these advances. I can recommend several to you if you’d like to contact me. The pricing is generally the same on the paperwork, but the companies vary about how strictly they will hold you to those terms. You really want a company that will be reasonable once you get your settlement. You need to be very careful with these cash advances because you can be taken advantage of in your time of need.
What Steps Do I Need to Take?
The car accident funding companies have this process down to a science. They are extremely fast and efficient to get you money. But, certain steps still need to be taken before the money can be sent.
1) Hire a Car Accident Lawyer and Speak to Him/Her Before Applying for a Loan
It drives me crazy when I am contacted by a funding company out of the blue asking me about a car accident case. I strongly recommend that my clients simply reach out to me first so that I can explain the options. I also like to recommend the companies to choose from. If a company has reduced their debt for my client in the past, I am more likely to recommend them.
2) Apply for the Loan
The paperwork is pretty easy for people to fill out. It honestly doesn’t require much effort. They don’t go through a credit check or anything. If you need help, my office can assist you.
3) The Funding Company Will Ask Me About the Case
As part of the process, the funding company will reach out to me to find out more about the case. They don’t want to pay money that they cannot collect on, so they want to learn more. They ask for the accident report, the insurance limits, and the injuries. They also ask me if I think there is going to be enough money left over in the case to repay the debt.
4) Sign Funding Agreement
Once the loan/advance has been approved, the funding company will have you sign the paperwork. They require that the lawyer signs off on the deal as well. The paperwork is usually sent electronically.
5) Money is Sent to You
How Do I Get My Money?
Once you have been approved for the money, getting it is pretty simple. Most companies offer you multiple ways.
Bank Wire
If you have a bank account, the money can be wired to your account in an hour or two.
Western Union
The money can also be sent via Western Union. All you have to do is go to a Western Union location and they will pay you.
E-check
This is a check that is emailed to you to print out. You can then take it to a bank or deposit it using a mobile app.
Overnight Check
If you want a physical check, one can be overnighted to you.
Check in Regular Mail
If you are not in a rush, you can be sent a check in regular US mail. This will get to you in less than a week.
Overnight Debit Card
If you want the money placed on a debit card, one can be overnighted to you. This is a convenient option especially if you don’t have a bank account.
Debit Card in Regular Mail
If you are not in a rush and do not have a bank account, a debit card can be mailed to you via regular US mail.
How Much Will It Cost Me in the End?
The bad thing about pre-settlement advances in car accident cases is that they don’t come cheap. Because the lending company is purchasing a portion of your settlement, it is not considered a loan. This is done so that they can avoid the legal limits on charging interest. It is common for you to be paying extremely high interest rates on the money. When I mean high, I mean 30% interest every three months! Additionally, you will have fees tacked onto the money owed. I have seen fees for document storage and retrieval, underwriting fees, and a fee for monitoring your case every six months. Let’s put it this way- if you do one of these loans and don’t repay it for a year and half, you will likely owe 3 times what you got!
Now, the good news is that simply because you owe the money on paper, does not mean that you will actually pay that full amount. The reason I wrote this article is to educate people that there are ways to negotiate this debt down. But, it really does depend on the company that you choose. As mentioned in this article, some companies are very greedy and want to extract as much money as possible from you. For this reason, I like to work with a few select companies that I know will reduce the debt and be reasonable. Let me be clear, however. The funding companies still have to make money off the advance that they gave you, but that does not mean that they need to collect the full amount. I have been able to successfully reduce the amount that my clients owe many times before. This increases the amount of money that they get out of the settlement and is a win-win.
Contact a Car Accident Attorney With Questions Regarding Pre-Settlement Funding & Lawsuit Loans
When my clients lose their car, lose their job or their ability to make money, or can’t pay rent, it is heartbreaking. Many people become desperate for money due to an accident that was not their fault. In these circumstances, getting funding to provide fast cash makes sense.
In my career, I have worked with many legal funding companies. Some are easy to work with, some are not. I know the companies that I feel comfortable working with and those to avoid.
If you are the victim of a car accident and need help, please contact me immediately. If you have a legitimate accident injury claim, I know that I can help you through this tough time. I will do everything in my power to help you and your family.
