Lenders are required to disclose their interest rates, but they often hide it in the fine print.
Lawsuits can take a long time to settle. There’s rarely a clear-cut way to end litigation after an accident. Either the other side settles quickly or they fight you every step of the way. Even a settlement without a trial can take months or even years to complete.
In the meantime, you have bills – medical bills, your regular monthly expenses, legal bills – and likely no income because you are out of work. This is the point where most people turn to pre-settlement funding. While these services can be a lifesaver, it pays to know how to recognize when a pre-settlement offer is shady.
They Ask You to Pay Back Money You Didn’t Borrow
Jim has been hurt in an accident with a tractor-trailer, and now he is out of work. The bills are piling up, and he is still waiting for his case to conclude so he can get his money. He turns to a pre-settlement company to get an advance.
Before he signs the loan documents, his ex-wife loans him the money he needs. He never completes the loan application. A few weeks later, he starts to get calls from collection agents alleging he has to repay the loan from the pre-settlement company.
Jim has probably been the victim of a scam. The scammers likely got his information from his online request for information. Jim should refuse to pay anything and contact his attorney.
A reputable Atlanta pre-settlement funding service is open and transparent with borrowers. One way to identify a trustworthy company is by client reviews. When you check the testimonials, make sure to go back a few years.
They Charge Outrageous Interest Fees and Hide It in the Fine Print
Carol was desperately in need of cash after losing her income following a work-related injury. The mortgage was three months behind, and she was in danger of having her car repossessed. She learned about pre-settlement funding and found a company that offered quick and easy approval.
After the loan was granted, she found out that the company was charging her 155% interest on the loan. As it turns out, the structure of their company allows them to skirt the usual caps on interest rates on loans, and she’s now on the hook for thousands of dollars more than what she borrowed.
Lenders are required to disclose their interest rates, but they often hide it in the fine print. Carol should have had her attorney review the terms of the loan before she agreed to it.
They Discourage You From Talking to Your Attorney
David was hit broadside by a beer delivery truck and has sued the company. While he is expected to win the case, he is struggling to keep up with his daughter’s tuition and his car payments.
Photo by Brooke Cagle on UnsplashHe needs money quickly, so he turns to pre-settlement funding. He has a few questions about the loan and tells the funding company he will have to discuss it with his attorney first. They discourage him, telling him that they have an attorney on staff that will be glad to answer any questions.
Furthermore, they rush him, saying that if he doesn’t sign today, the deal is off the table. David should contact his attorney anyway. If the current company rescinds the offer, other companies will gladly lend him the money.
They Tell You They are “Abiding by Industry Standards”
Kelly got hurt when walking past a construction site, and despite her injuries, she has returned to work. The bills, however, piled up while she was out of work. Now she is seeking a pre-settlement loan to cover her expenses until the conclusion of the case.
She talks to a representative and they assure her that they are “abiding by industry standards,” when it comes to their lending practices. Kelly has no idea what this means. Different states have different regulations about lending practices, and while some states cap the amount of interest, others don’t. Kelly should consult her attorney.
Say No to Shady Pre-Settlement Funding Offers
These informative snippets can help you identify a scam early on and avoid being a victim of a shady pre-settlement company. If there is any other detail in an offer that raises suspicion, contact your attorney immediately.
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