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If you have been injured in an accident, it can create tremendous financial pressure on you. When you can not work and have no income coming in and are also dealing with a health issue from the injury, it is a really stressful time.
You may have a great lawsuit on your hands if you were injured due to the negligence of someone else and you might some day get a lot of money from it depending on the case facts and the amount of insurance that is available. But that will not help you now when you have mouths to feed and bills to pay.
When this happens, a lot of people think about getting a lawsuit loan. But is it a good idea?
Overview Of Lawsuit Loans In Illinois
If you have ever watched daytime TV, you have seen a lot of commercials for crappy law firms (my opinion) and companies that offer “easy” lawsuit loans for your case. That is not necessarily the case.
In order to get a lawsuit loan if you are in a car accident, hurt at work or have some other case, before any company will give you money, there is a process that has to take place. They want to know that if they give you money, they will get it back in the future. Almost all of these loan companies only get paid back if your case wins and a recovery is made. As a result they will want:
- To talk to your lawyer. They will not just take your word for it that you have a great case. They want your attorney to outline what the case is about and how much you might recover and when that will happen.
- Review records related to your case. They may want to see an accident report, medical records or other documents.
- To use internal risk management tools to determine how much makes sense to lend you.
- Require you and your attorney to sign paperwork that will allow your lawyer to pay them back first before ever giving a settlement distribution to you.
If this happens and they think you are a good risk, they will lend you money and you can have a check or direct deposit within a week or two. Sometimes it is faster, other times it takes longer.
Are Lawsuit Loans A Good Idea?
We can not put ourselves in your shoes. If you have no way to pay your rent or mortgage or have other major debts, you can be desperate and that is logical.
Our warning is that these loans are predatory. While you will not have to pay it back unless you win your case, a loan of $10,000 will not result in you paying back $10,000. In fact, if the case drags on a bit, you could end up paying back 3-5 times that amount or more.
The interest rates on these loans are incredibly high and they compound over time. It is not like getting a loan for your car or your home.
In other words, when clients ask us if they should do this, we generally discourage them from doing so and highly recommend that if they do it, they get the least amount possible.
We have seen too many instances of when a loan resulted in someone ultimately getting so much less than they would have in the end of their case that they feel like they lost the case when in fact they won. We do not want that to happen to you.
What Else Should You Know
Beyond trying to avoid these loans if possible, make sure that you have explored all of your other options first. In some Illinois workers’ compensation cases, you can get an advance on your settlement from the insurance company when a case is delayed for an IME or other reasons. Talk to your lawyer about this. In some personal injury cases, it is possible to get some money before you settle or there are ways for your attorney to force an entire insurance policy to be paid.
What you want to avoid as much as the loan is making sure you do not settle a case too soon or for too little. That is often worse than just taking a small loan.
We also advise you to beware any Illinois injury attorneys who are enthusiastically pushing you to take a lawsuit loan and insisting that you work with a certain company on it. It is possible that they are getting kickbacks or other incentives to do this and not acting in your best interests. It is a huge red flag.
If you have any questions about this process or want to speak with a lawyer for free, please contact us any time.
