If you’re in a tight spot financially, you may be considering a slip and fall accident loan. Learn the pros and cons before you sign on the dotted line.
More than car accidents or other types of personal injury cases, slip and falls are often depicted on television as opportunities to make a quick buck.
Anyone who has suffered a slip and fall knows this is nonsense. The personal injury claims process can be slow and frustrating. Injury victims, badly in need of financial support, often settle for pennies on the dollar.
Slip and fall cases can be catastrophic. A broken bone is bad enough, but spine or neck injuries can put you out of commission for months or years. A traumatic brain injury or nerve damage can impact your career and your family’s livelihood.
Maybe a big jury award is coming in the next few years. But many people can’t afford to wait that long. If you’ve suffered from a serious slip and fall injury and find yourself in a difficult financial situation, there are options.
Some personal injury victims turn to their savings to pay the bills while waiting for a settlement. Another option is a slip and fall lawsuit loan.
What is a Lawsuit Loan?
A lawsuit loan is when a lender uses your case’s potential value to secure repayment of the loan. Though individual loans differ, the agreement is that you don’t pay back the loan until you win or settle your personal injury case.
In this way, the loan functions more like a “lawsuit cash advance” that you can use to pay the bills.
Here we look at lawsuit funding loans for slip and falls and premises liability cases. We’ll examine some of the potential pros and cons of these loans to help you make the best possible decision.
Benefits of Slip and Fall Accident Loans
The first and most obvious benefit of a lawsuit or pre-settlement loan is income replacement. Depending on your injury, you may suffer partial or complete loss of income.
While that loss is the fault of the person who hurt you, it’s difficult to sit and wait for the justice system to compensate you when the rent is due. An advance on the amount of money coming your way can pay your family’s living expenses while you fight the good fight.
That added income can also help you get some leverage while negotiating your slip and fall settlement. If you’re desperate to get a settlement so that you can pay your medical bills or buy food for your family, you may settle for less than you should. A pre-settlement loan can give you the income and confidence to hold out for the best settlement offer.
Another benefit to an accident lawsuit loan is that you don’t have to pay the loan back if you lose your case. This would probably only happen if you went to trial, got a bad jury verdict, and then got a bad decision on appeal without settling. (Both your lawyer and the lender know that this situation is very unlikely, as the vast majority of cases settle.)
It’s worth remembering that this doesn’t mean that a loan is risk-free. There are several questions you need to think about before entering into one of the loans for your case.
Drawbacks of Slip and Fall Accident Loans
While the benefits of a loan for your slip and fall claim might seem enticing, think twice before getting one. The costs of getting a loan like this might be steep or even legally questionable.
1. Interest and Fees
Lawsuit loans can be extremely expensive. The interest rate on these loans can be as much as 27-60% per year, which is steep compared to the low rates of more traditional kinds of loans.
Those rates resemble a payday loan more than a traditional home or car loan. Given that lawsuit loans and pre-settlement loans are largely unregulated by state and federal governments, you must read the fine print. Make sure you understand exactly what interest rate you would be paying before signing on the dotted line.
In addition to high interest, you would likely be paying loan fees like origination and administration fees. These are typically not upfront fees, but they can eat up your settlement in a hurry. You could end up owing the lender all of your settlement and thousands of dollars more.
Carefully review the paperwork for any hidden fees, as these would be a red flag indicating that you should take your business elsewhere.
2. Loan Contract Legality
Given the expense of these loans and the desperation of slip and fall accident victims, it’s reasonable to wonder whether a company can get in trouble for pushing loans with unfavorable terms. Some might even suggest that these contracts are illegal or unenforceable.
If a person with traumatic brain injury has trouble understanding loan paperwork and agrees to a 60% annual interest rate, the loan might be considered unconscionable by a court. In that case, the contract would be so unfair that it could not be enforced.
If a contract were illegal under state law, there’s a risk that a loan contract could be rescinded or unwound. The parties could be forced to give back the benefits of that contract, which could cause a worse financial situation than they started with.
Though those scenarios may sound scary, they don’t apply to most slip and fall loans. Some courts, like the California Supreme Court, have considered whether interest rates can make a loan contract unconscionable. Though the Court held that rates can be unconscionable, it did not draw a specific line. States don’t all agree as to what is unconscionable.
The bottom line is that you, as the injured person, must exercise the utmost caution when shopping for lawsuit loans. Make sure that you’re getting a fair deal and that you only enter into a contract with a reputable legal funding company.
Can You Get a Personal Injury Lawsuit Loan?
No matter how serious your slip and fall injuries may be, settling or trying a slip and fall case takes time. There are at least six distinct parts of a personal injury lawsuit. Each of those can take months.
The lawsuit timeline doesn’t include the claim process with a property owner’s insurance company. Nor does it account for other possible delays that come with any personal injury case.
If you have been badly injured by your slip and fall (e.g., a broken neck or pelvis), you may not be able to work at all. A pre-settlement funding loan can ease some of the financial pressure caused by delays in the claim, settlement, or civil litigation process by getting you money in the short term.
Not all slip and fall cases will qualify for loans. These loans are paid back from the amount of your slip and fall settlement or judgment. An injury that’s more likely to result in a large settlement is more likely to get the attention of a lender.
Breaking an arm is painful, but it probably won’t put you out of work for long. If you manage to get a loan, it would be small, and still have a high interest rate.
A spinal cord injury, on the other hand, could potentially cut off your ability to earn a living. It would also require a lifetime of expensive medical treatment and therapy. If you need $25,000 worth of medical expenses per year and you are projected to live 30 more years, that’s $750,000.
Then, let’s say that your spinal cord injury loses you $1.5 million of earnings over your lifetime. In this case, a lawsuit lender would be more receptive to lending you a significant portion of those damages.
Keep in mind, though, that those benefits would come at the cost of significant loan fees and interest.
Healing While Getting Financial Support
Slip and fall injuries harm your body and your dignity. They also invite strangers, particularly insurance adjusters and lawyers, into your private life. Given that abundance of insult and injury, you shouldn’t also have to worry about money.
Slip and fall lawsuit loans or pre-settlement loans can help you remove that worry from your mind by getting you the cash you need.
Even so, you should always make sure that any document you sign is fair. If you have any questions about personal injury loans or settlement funding companies, contact a qualified personal injury attorney in your state for a free consultation and case evaluation.
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