Time passes, following the filing of a personal injury claim. While the claimant awaits the holding of a trial, he or she has no way of making any money. In order to meet that need, a new type of loan has been created.
Different names for a personal injury loans
• Lawsuit case advances
• Pre-settlement funding
• Non-recourse financial assistance
The role of a lawyer, when a client takes out a personal injury loan.
Only someone that has filed an injury claim with the help of an injury lawyer in San Leandro can seek pre-settlement funding. The client’s attorney must cooperate with the terms of the loan. In addition, the client’s attorney must confirm the facts of the case.
Most lawyers discourage their clients from seeking any type of lawsuit case advance. If a client chooses to ignore the lawyer’s advice, the new arrangement does away with the feature that is known as the lawyer-client privilege. In other words, the lawyer gets forced to share some of the client’s information with the lending agency.
The lawyer’s payment comes from the settlement fee, but that same fee must also be used to pay the agency that provided the loaned money. Moreover, the same agency might add certain fees to the balance owed by the client. Following the addition of such fees, the agency that has granted the loan can take a bigger cut of the settlement. As a result, the lawyer and client get less money.
What sort of fees might be added to that balance?
Application fee: The lender must pay for the chance to apply for the cash advance.
Processing fee: This is what the lending agency charges for filling out and filing specific forms. This charge gets added, because the lender must collect certain information, in order to set up the loan. This particular fee covers the cost of paperwork and the salary of the personnel that deal with such paperwork. A company that grants personal injury loans might refer to this charge as a conveyance fee, a bonding fee or a doc fee.
Origination fee: This charge is made in order to cover numerous costs. It gets used to pay for a variety of administrative services.
Underwriting fees: These are charged for the service of evaluating a loan application. Even though a loan must be reviewed, the lender gets hit with added reviewer fees.
A final warning about personal injury loans
Like all loans, this provides the lending agency with the opportunity to charge interest. Many lending agencies make a point of compounding the interest. When interest gets compounded, the amount of money owed by the lender increases greatly. Consequently, the lending agency gets a large cut of the settlement.