What are Settlement Loans and Should you Take One Out on Your Pending Lawsuit?
“Lawsuit Loans,” “Settlement Advancements,” “Legal Funding,” “Lawsuit Funding,” “Settlement Loan,”….. whatever the label, these are all terms used to describe a growing industry that loans people money for settlements they have yet to receive. While not a new concept, it seems the number of businesses offering these loans is increasing rapidly.
It is a relatively simple process — you have a pending lawsuit, whether it’s a personal injury or workers compensation or some other lawsuit that typically results in a settlement, and these loan companies offer you a certain dollar amount that they will loan you during the course of litigation. Once the lawsuit is complete, you must repay them from your settlement.
But there is a catch. While the lawsuit is pending, you are paying interest on that money. And the interest is high. The annual interest owed on this kind of loan is typically larger than the loan amount itself. Just to reiterate, you end up paying just as much, if not more, than the amount you borrowed, in interest alone. What often happens is once the lawsuit is settled you have to hand most, if not all, of the settlement directly over to this loan company.
At the Hankey Law Office, we understand that money is tight during a lawsuit. Most claimants are unable to work, and may find themselves in financial hardship. If you are considering a loan, please call the office first. Perhaps in your case, a small loan is unavoidable, or perhaps the attorney can expedite a settlement so that you can avoid the loan all together. There may even be an alternative option that is specific to your case. It’s important that you do not take out an advancement loan without speaking to your attorney first. We are here to help you make the best decisions, not only for your case, but also for you and your family.
If you have further questions about these loans, please don’t hesitate to contact the Hankey Law Office at 317-634-8565.