Expenses can add up after an accident. You may not be able to go back to work due to your injuries. You may not have transportation to get to work. You may face financial pressure for one of many reasons during this time. People ask me all the time: Should I take out a loan or advance against my settlement to meet these obligations?
Missouri law limits the amount that medical lienholders may collect on your case to one-half the amount of the settlement remaining after attorney’s fees and expenses. This effectively bars medical lienholders from taking too much of the settlement.
Advance funding loans, however, are not grouped into the medical lienholder category. They are typically paid directly out of the client’s net recovery after the attorney’s fees, expenses, and medical lienholders are accounted for.
I generally advise my clients not to take out advance funding loans. I think that you are better off not borrowing against the settlement due to the relatively high interest rates advance funding companies charge. The interest on these loans also compounds quarterly. Since the payoff amounts are dependent on when the case settles, the longer the case goes on, the higher the interest the loan company receives. You may have very little room to negotiate with the lending company after your case settles.
Sometimes life does happen though. If you have no other means, getting a loan against your settlement can be a better option than some of the alternatives. Settlement advance companies, while not ideal, are at least better than obtaining a car title loan or paycheck cash advance. The interest rates charged by those companies are borderline criminal in my opinion (but seriously, go look it up).
I have worked with many different loan companies over the years. If you do have to use them, the company that I think has best served my clients has been Oasis Legal Finance. They have a simple electronic signature system that allows clients to approve their loans easily. This will then by sent to me electronically for my approval. They can disperse funds to clients quickly. I have also seen them be flexible with the payoff totals, something that has really helped some clients in the past. They are not paying me to say this nor do I have any financial interest in Oasis. I simply think that they are the best loan funding company that I have deal with.
Before deciding on an advance settlement, talk to your attorney. There are many different considerations that should be discussed prior to obtaining funding. Loan companies have formulas and experience that tell them how much they should lend on a case, but even so, you should talk to your attorney and get legal advice prior to putting pen to paper.