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Following on the heels of my prior post discussing the financial hardships personal injury victims have after their accident, but prior to their case being resolved, I think it an appropriate time to discuss those personal injury clients who are in need of emergency funds to get them through significant financial problems. People who have been involved in an accident wherein they are hurt due to the negligence of a 3rd party or parties often incur large medical bills. Further, their personal injuries often mean that they are unable to work, or can only work reduced hours. In the case of certain types of personal injuries some people can never go back to their former occupation and must instead get retrained for different employment, sometime involving a lifetime of reduced earning. To suggest that frequently the personal injury accident victim undergoes serious financial problems is an understatement, to say the least. These issues arise irrespective of whether the personal injury victim is injured in a motor vehicle accident (which encompasses the car accident, motorcycle accident, bus accident, or even train accident or boating accident), a slip and fall, or the result of a defective product or even medical malpractice.

Over the last few years we have been seeing an increasing number of lending companies which will let someone borrow funds by promising to pay the money back, including interest, out of the proceeds of their personal injury case. In my experience as a personal injury attorney these types of loans should only be used as a last resort. To say that it may be cheaper borrowing money from the "mob" is probably not too far wide of the mark! Those companies that lend money in return for a promise to pay out of the personal injury case award charge extremely high interest rates, typically far higher than a bank. In their defense however, if there is no personal injury award then you owe them nothing, not even a return of the principal. Also, those that are in dire financial straights may have no option other than to borrow through one of these lenders.

I always discourage clients from borrowing money on their personal injury case unless there is no alternative for them. The best advice is to discuss your need to borrow funds from one of these companies in detail with your personal injury attorney. Personal injury attorneys are familiar with such lending companies and should be able to discuss the pros and cons of such a loan with you in a careful and thorough manner.