Recently we have seen more and more commercials influencing clients to seek out advance funding for the personal injury/car accident/slip and fall, or other related personal injury case. It is simply a bad idea. Here is the scenario:
You are driving along, stopped at stop sign, or simply minding your own business when you are hit by another car in a car accident, rear-ended at a stop sign, or slip and fall. As a result of the event, you sustain personal injuries for which you are now seeking compensation. In a Florida car accident you most likely will have Personal Injury Protection (PIP) benefits to help with medical bills or lost wages; however it may not be enough. In a slip and fall, most companies do not have a Medical Payments (MedPay) provision in the policy the pay your medical expenses. You are uninsured as far as health insurance. What will you do? Your bills are piling up! Your rent is due, the electric bill is due, and expenses keep mounting! Again in most every Florida car accident there will be at least some PIP benefits to help with lost wages (Though PIP only pays 60% of your lost wages). If you went to the emergency room after the collision, it is most likely the hospital found a way to bill and use almost all of your PIP benefits (medical bills are only paid at 80% under PIP, and you still must meet your deductible) and did nothing for you but to advise you to come back if you are hurting more. Whatever will you do…?
Car accident and personal injury lawsuit prefunding companies will come to the rescue … [or NOT]. There are numerous companies out there who will come to your rescue and provide you money before your case has been tried to a jury verdict, settled pre-suit, or settled at mediation.
Let’s call Client #1 Fred. Fed was injured in a car accident in Orlando, FL. As a result of the car accident fed could not go back to work. Fred’s case went to litigation. During the time the case was in pre-suit, and then litigation, Fred needed help with rent, utilities, etc. Fred turned to the funding companies and borrowed about $3,500.00. By the time Fred’s case was resolved, Fred had to pay back over $5,400.00. Almost a $2,000.00 increase from what he received. The problem: The $2,000.00 came from Fred’s portion of the claim. Had Fred not received the funding he would have received at least $2,000.00 more in his pocket from the settlement. In his case, Fred understood what he was doing, but in the end was not happy that he had to pay out an almost usury amount of interest and fees.
Now we turn to Client#2. Client #2 is Sally and she needed money – supposedly to help pay rent and bills. Sally received the money, used the funds to have her car engine (the car was not involved in the accident) repaired and surgery for her pet. Sally received $1,000.00. As of the day she received the money, Sally had to pay back over $1,600.00. Sally’s lawyer said: “No it is not a good idea, it is not in your best interest,” but Sally when ahead with it anyway. As her case proceeded Sally’s fees climbed and climbed. For $1,000.00 received Sally had to pay back over $2,000.00. An increase of $1,000.00 and once again less money in Sally’s pocket book one the case was resolved.
Sometimes, you have no choice, sometimes you need help. When you are involved in a car accident, slip and fall or other personal injury matter, you need help making ends meet. If it truly an emergency and you are facing eviction, it may be reasonable to seek help from a funding company. In most cases it is not. Your recovery will be reduced in the end significantly. The money is deducted from the portion of the recovery to the injured client. In many cases the client is not happy.
You should speak to an experienced Orlando car accident or Orlando personal injury lawyer before ever considering seeking help from a pre-suit funding company. Some companies are reasonable, many are not. Remember they are taking risk that you may never recover money, or recovery may be limited by circumstances you may not be able to control. Therefore they charge large fees and higher than usual interest.
Read carefully you pre-funding agreement, and think twice before signing on the dotted line. The thrill of fast cash is soon lost when at the end of the case; you realize you are losing money out of your pocket in the form of high fees and interest rates. At the Orlando car accident Cressman Law Firm, we rarely recommend clients use pre-suit funding. Rather, look to family and friends for help – at least they will not charge exorbitant fees and inertest rates to help you out.