Through the often long and arduous process of litigation, you may incur substantial financial hardship. For example, victims of a motor vehicle accident are often unable to work or pay the day-to-day bills. There may even be medical bills related to your claim.
Recently, there has been a rise in the number of companies providing loans to people who have a pending case.
These loans allow for the person’s potential recovery or settlement to stand as collateral on that loan. These companies, such as Oasis Financial, offer money upfront for those injured in an accident, but that money comes at a high cost.
These loans are typically provided at a very high-interest rate.
This amount will function as a lien, or claim, on any recovery obtained from your case. Cases are often in litigation for several years. During that amount of time, a loan may double in cost. This can make achieving your goals in the litigation process much harder to achieve.
When a company offering loans on a legal recovery enters into a loan agreement with an individual, they will often communicate with the attorney. As your attorney, we will be bound to work with such a company if, and only if, you provide us direction to do so. These legal loan companies will direct the attorney not to engage in any resolution of the claim without first contacting that loan company. This creates an additional burden in resolving your claim because, not only are medical bills required to be paid off, but also the amount of this additional loan.
There is a real possibility that although you, as the client, may be satisfied with a recovery, the loan company may reject a proposed settlement.
While it may be difficult to avoid obtaining financial help, if there are other alternatives to a loan on a legal recovery, those options should be fully explored. However, as attorneys, we have to recognize that financial troubles due to an injury can build over the course of the litigation process. If you feel legal loans are necessary in your case, we urge you to speak with us in regards to the potential consequences prior to making any agreement with such a loan company. By communicating with the attorney, you will be able to properly time that loan to minimize the negative impact it has on your long term financial goals. If you have been injured and believe you need an attorney, contact Tapella & Eberspacher today at (217) 394-5885.