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Case Loans on Personal Injury Cases

Borrowing money against a potential personal injury claim settlement

It is the holiday season and as a personal injury attorney, I often get calls from clients inquiring about getting an advance on the money that they are going to get out of their pending personal injury claim if and when the claim settles. These calls are more frequent during the holiday season as people are often looking for ways to get some money so that they can buy their friends and family members gifts. My general rule of thumb on this issue is to avoid these case loans!! There are many companies out there now who offer to advance your clients money on their personal injury cases. What they usually don’t tell people is that these loans come with interest rates that are through the roof. Usually, these loans carry with them an interest rate of 30% or higher. 
The only time that I will facilitate one of these loans for a client and feel positive about it is if a case is about to settle and I have a good idea of how much the settlement will be. In these situations, I can get a client a little bit of money knowing that I am going to be settling their case in a short period of time so that we will be able to pay back to loan sooner rather than later to avoid having to pay a ridiculous amount of money in interest. To have a client take one of these loans out early in the case is a huge mistake. This is because as a personal injury attorney, we never know exactly how long it will take for a case to settle, if it will settle, or if it will end up in litigation for several years. Thus, we have no way of knowing how much interest will accrue, leaving the door open for a potential disaster if they case does not pan out. Also, from my experience with these loans, once a client gets their first loan, more likely than not that same client will be calling you for a second and third loan. Ultimately, these loans serve as a very temporary Band-Aid.

Yes, it is possible that a client can take out a loan and the case can settle quickly for a good amount of money and everything works out. The companies out there who loan the money are usually aware of how these cases work and are careful about how much money they loan out on any particular case. The biggest company out there is Oasis Financial, and having worked with them in the past, I can say that they do a nice job as far as getting the clients the money quickly and understanding the nature of the business.  

In conclusion, as an attorney, be careful allowing your clients to take out these case loans and my opinion, only do it in certain situations. 

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Law Office of Ryan M. Rosenthal
Formerly:
The Law Offices of Richard S. Sennett.
Practicing Law For Over 60 Years

Ryan M. Rosenthal - Partner
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