Loans Against Personal Injury Claims
Yes, you can get loans against personal injury claims. You will need to provide extensive information to the lender, and your personal injury attorney will most likely need to provide an opinion to the lender as to the value of your claim. While a loan against your personal injury settlement may sound attractive, you should carefully consider the pros and cons before committing to financing your personal injury settlement.
What Is A Personal Injury Settlement Loan?
A personal injury settlement loan is an agreement between you and a lender, where the lender gives you money in exchange for an ownership right to some or all of your personal injury settlement funds. Most loans against personal injury claims are limited to settlement funds. In other words, if there is no settlement, or if the settlement is not enough to pay off the entire loan amount, the lender can’t pursue you personally for the remainder.
Should I Consider A Loan Against My Personal Injury Claim?
If money is tight and you view the loan as a way to help you make ends meet until your settlement is complete, loans against personal injury claims can be a perfect solution. Additionally, the loan may provide you with more time to settle your claim for fair value rather than rush to settle at a lower amount. If an insurance company thinks you are in a rush to settle your personal injury claim, they will typically lower the settlement offer in hopes you will take it.
What Should I Consider Before Taking A Settlement Loan?
First, you need to carefully review the terms of your loan. There are no guarantees as to whether your claim will settle. There are also no guarantees as to how much your claim will settle for. If you do take a settlement loan, you’ll want to know exactly what the language of the agreement says, in the event your personal injury settlement or jury verdict is not high enough to repay the loan.
Second, you’ll want to consider the fees and interest involved in taking a loan against personal injury claims. Lenders believe they are taking a risk by lending funds against the personal injury claim. As a result, their fees are higher than typical in the lending marketplace. If you do take a loan against your personal injury settlement, you would do well to limit the amount of the loan as much as possible, so as to minimize the interest and fees charged.
Lastly, consider how long it may be until your case settles, together with other options for making ends meet. Sometimes a family member can assist with lending you some money to get by until your personal injury claim settles. Or, you can cut expenses in the meantime. If your claim is only a few months from settling, stretching to make ends meet is probably a much better option than borrowing against your personal injury claim.
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