This is a topic that’s near and dear to my heart because invariably, I would say 50 to 60 percent of the people that I represent in car accident cases call me at some point usually at the beginning portion of their claims and they’re asked – they want to ask me for a loan.
Unfortunately South Carolina law prohibits personal injury lawyers or lawyers generally for providing loans to their clients based on any expected recovery that they might get from a personal injury claim which leaves my clients a little bit out in the cold.
Because of the fact that your lawyer cannot provide you with a loan directly, there are a lot of companies that have moved into this particular vacuum that want to provide my clients with loans while they wait for the cases to settle.
Classic examples would be 877 Cash Now, JG Wentworth, Blue Sky, which is the Indian reservation, Peachtree Lending, and a whole host of other companies that have moved into that particular area.
They obviously serve a purpose and they’re talking about structured settlement, this, that and the other. What they’re really kind of gearing that towards, where it really needs to be used is when someone is going to be receiving an extraordinarily large sum of money, i.e. a medical malpractice action or a large settlement based on mass tort. But it’s going to take them two to three to four years to actually get the thing processed.
That’s an instance where these particular companies might actually serve a purpose. The people who are in car wrecks unfortunately – obviously their cash reward is going to be considerably less and so what they’re ultimately going to walk away with is going to be – it’s not going to be millions of dollars. It’s going to be thousands of dollars.
So if you go out and you borrowed $1,000, but you’re doing it at 120 percent interest rate which is the part that they fail to mention to you, then you’re going to be paying out the nose and what I often see is my clients are the victims of their own success in the sense that they go and they get this particular loan. They tell me about it. I facilitate it in some way, shape or form or basically just wash my hands off it. Then when it comes time to settle, invariably, I’m giving the overwhelming majority of their money to the company that they actually borrowed money from to begin with.
So let’s just say for example, they were going to walk away with a $3,500 amount of money after I paid their medical bills and I take my legal fee.
But they’ve got a $1,900 outstanding loan plus interest with Bridge Loan, which is a local company. They’re looking at maybe $1,300 in their pocket and that is a really bad situation not only for them to be in but for me to be in, because my job is based on good customer service and providing my clients with great results.
They’re not real happy at the end of the day when they’re walking with $1,300, even if on some level they realize that the reason why that occurred is because they insisted on getting a loan that I told them really was a bad idea.
You need to be aware of these particular companies and you need to weigh the pros and cons about whether you actually want to borrow money, because there’s a distinct possibility that at the end of the day, you walk away with nothing or very little. I don’t want you to find yourself in that situation.
If you have any questions regarding a car accident claim or loans in general, contact the Hartman Law Firm at (843) 300-7600 today.
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