Financial Assistance After a Car Accident: What to Know

Key Takeaways

• Settlements take time, so you need a backup plan to deal with added medical bills and other expenses while recovering from injuries sustained in a car accident.
• Car Insurance companies delay settlements as a tactic to force you to accept less than your accident claim is actually worth.
• Pre-settlement funding is an option for financial assistance while awaiting settlement of your case.

What Are My Options for Financial Assistance After a Car Accident?

Insurance companies know that injured plaintiffs frequently have difficulty making ends meet while out of work recovering from their injuries, so claim adjusters purposely delay settlement negotiations to increase the financial pressure and gain an unfair advantage. There are, however, options available to provide you with financial assistance to prevent delaying tactics from putting you in a financial bind. The following are some of the typical options available for financial assistance after an auto accident. 

Pre-Settlement Funding

Companies specializing in pre-settlement funding lend you money in the form of a cash advance based on the strength and value of your personal injury claim. The money advanced is repaid with interest when you receive a settlement or judgment in the case.

You will see pre-settlement funding offered in advertising that refers to it by other names, including:

• Pre-settlement loans
• Lawsuit Loans
• Lawsuit funding
• Settlement funding

The cash advance that you receive through pre-settlement funding is not the same as traditional lending that you may have used to borrow money from a bank or credit union to finance the purchase of a car. Traditional loans impose a personal obligation on you and typically require monthly or quarterly payments until the debt is repaid. 

The money that you receive through pre-settlement funding is based on the funding company’s evaluation of your case rather than the strength of your credit score or employment history. The company needs to be satisfied that you have the evidence to prove your claim and that you will win a favorable settlement or judgment from which the car accident cash advance and interest earned on it can be repaid to the funding company.

Because the funding company looks to the settlement or judgment in your car accident lawsuit as its source for repayment of what is owed to it, your credit history is not a factor in the qualification process. If you are out of work or have a poor credit history, you can still qualify for pre-settlement funding based on the strength of your claim against the person at fault for causing the accident and the anticipated value of the car crash settlement or award.

Not only do you not have monthly payments to make with pre-settlement funding, but also the money advanced to you does not appear on your credit report as a debt because you are not personally obligated to repay it. In fact, once you receive the money you need through legal funding to pay bills, do repairs on your home, or for any purpose that you choose, all of the risk is on the funding company. If the case against the at-fault driver does not result in an outcome favorable to you, or if the settlement or award is not enough to repay what is owed to the funding company, you are not personally obligated to repay it.

Pre-settlement funding is available for any claim that will result in a judgment or negotiated settlement in favor of the plaintiff, including:

• Car accidents
• Truck accidents
• Slip-and-fall accidents
• Assaults
• Medical malpractice
• Wrongful death lawsuit
• Product liability claims
• Construction accidents
• Workers’ compensation claims
• Wrongful termination and employment discrimination claims

In order to qualify for legal funding, your claim for damages must ask for compensation for the financial losses and non-economic injuries, such as pain and suffering, that you incurred. There must be evidence proving that another party was at fault and that you suffered severe injuries as a result of the accident. Companies offering pre-settlement loans usually want to see that a policy of liability insurance exists to pay your claim if your lawyer succeeds in winning a settlement or judgment in your favor against the defendant.

Another qualifying requirement to obtain legal funding is a pending lawsuit against the party responsible for causing you to suffer serious injuries. You also need to be represented by an attorney. 

The legal funding company obtains a great deal of the information it needs to evaluate the strength of your case from the lawyer handling it on your behalf. The lawyer also helps you by reviewing the terms and conditions of the lawsuit funding to ensure that the interest rate and other terms conform to what you were promised when you first applied for the funds.

Funding companies are generally free to set their own interest rates and terms, so shop to find a company offering the lowest rate before applying for financial help. Rates vary throughout the industry, so take the time to compare companies and the cost of the funding. 

Other sources of financial help that may be available 

Bills for medical treatment for injuries suffered in a motor vehicle accident can strain an already tight household budget. In addition to legal funding to obtain the money to pay mounting medical costs and other expenses while awaiting a settlement of your car accident case, you may wish to consider the following options:

• Health insurance: Filing an insurance claim with your health insurance company may be an option when financial strain is caused by mounting medical bills for treatment related to serious injuries suffered in the car accident. Just keep in mind that you will be responsible for payment of any deductibles or copays due under the terms of your health insurance plan. 
• Personal loan: Borrowing money from a bank or credit union may provide a source of funds to pay medical expenses and living expenses while awaiting a settlement, but it adds another monthly payment to your financial obligations and affects your credit score.
• Local charities: If the aftermath of a car accident puts you in a financial crisis, local charities may be a source of financial assistance. They may be in a position to offer money for food and shelter.

Discuss your financial situation with your personal injury lawyer who may know of other sources of financial assistance available in the state and community where you reside.

Questions Other People Are Asking About Car Accidents and Recovering Compensation

Trying to find a source of funds to get you through the time it takes to get a settlement or award against the parties responsible for causing a car crash may not be the only source of concern in the aftermath of a car accident. Other concerns that may arise include the following:

• What happens if you get hit by someone without car insurance? A study found that one out of every eight motorists does not have insurance on their vehicle. You can protect yourself against uninsured motorists by adding coverage to your car insurance policy for accidents caused by uninsured motorists. If you are injured in a car accident caused by an uninsured driver, you simply file the claim with your insurance company under the uninsured motorist coverage of the policy. 
• Can you lose your home due to an at-fault car accident? If you are the party at fault in causing a major car accident, your auto insurance policy will pay any car accident claims made against you up to the limits of your policy. If you do not have enough insurance coverage to pay the car accident claims, the injured parties could obtain judgments against you, which would give them the right to seize property that you own to pay what is owed. The best way to protect your house and other assets is to review your insurance policy with an insurance agent to determine if you have enough coverage.
• Are there grants for car accident victims? If you suffered serious injuries in a car accident, check government agencies in your state to find out about any programs available to assist victims of car accidents. Your car accident lawyer may be able to assist you. Even if your state does not have a program specifically for car accident victims, you may qualify for financial assistance from your state’s crime victims compensation fund provided the auto accident was caused by someone during the commission of a crime. For example, a driver in a stolen vehicle who crashes into you while fleeing from the police could make you eligible for your state’s crime victims compensation program to recover for bodily injury or property damage.

Conclusion

If you are involved in a serious car accident caused by the negligence of another person, getting the money you deserve to compensate you for the bodily injury and property damage it caused takes time. There are financial resources available to relieve the strain that medical expenses and loss of a steady income can place on your budget while out of work recuperating from your injuries and waiting to return to the normal life you led prior to being injured. 

Discuss your financial situation with the personal injury lawyer handling your car accident case. Your lawyer is an excellent source of advice and guidance about pre-settlement funding and other financial resources that may be available to you.