Three Shady Pre-Settlement Scenarios to Avoid


When you are hurt in an accident, life can turn upside down in an instant. You may be preoccupied with making doctor’s appointments, working with your attorney, and recovering at home, all at the same time. Also, you might be struggling, trying to keep up with the bills and ongoing medical expenses.

Many people who find themselves unable to work in the wake of an accident depend on legal funding and pre-settlement loans to keep their heads above water until their personal injury case settles.

While most legal funding companies and pre-settlement loan companies are legitimate, there are some shady scenarios to avoid while you wait for your case to be settled.

1) Repaying Money You Didn’t Borrow

Mike was hurt in a trucking accident, and he has been out of work for six weeks. The bills are piling up, so he turns to a pre-settlement funding company for a loan until his case is concluded. He files the application, but two days later, his ex-wife offers to loan him the money he needs to stay afloat. Mike calls the lender and lets them know that he will no longer need the loan.

A few weeks later, he gets a call from a “representative” of the lending company stating that he owes the funds and must immediately pay them back. They threaten him with lawsuits, garnishments, and even jail time. Intimidated and afraid, he breaks down and sends them a payment.

This scam is common, and many people pay back money they don’t even owe. You can back out of your application at any time, provided you have not signed the final documentation and accepted the funds. A scammer likely got Mike’s information from his application and harassed him until he paid up. If you get a call like this, contact an attorney immediately.

2) Discouraging You from Having Your Attorney Present

Melanie’s case has been dragging out for months, and there is no way she’ll be able to keep her home if she doesn’t get some money soon. Melanie decides to get a pre-settlement loan to stay solvent. The funding company tells her that it is not necessary to have her lawyer present when she comes to sign for the loan.

She signs the documentation, receives the funds, only to find out that the interest rate is 100 percent, and she will have to re-pay the loan in full regardless of the outcome of her case.

There are so many clauses that companies can sneak into a contract’s fine print that it is a bit dangerous not to have your lawyer take a look at it first. You may be paying more interest than is allowed by the law or agreeing to unfavorable repayment terms. Have a lawyer look over everything before you sign anything.

3) Encouraging You to Consult with Their Attorney

Daniel was ready to sign the paperwork and get the ball rolling on his pre-settlement advance, but he wanted his lawyer to take a look at it, just to be sure. The company assured him that they had their team of in-house attorneys who would be glad to go over the fine details with him—free of charge.

He thought about this option for a while—it seemed attractive as it would save him the cost of paying his own attorney. In the end, he decided it was more prudent to have his attorney review the contract.

Remember, the pre-settlement lending company’s attorney works for them and has their best interests at heart. Your lawyer works for you and has your best interests in mind. Choose wisely.


When it comes to getting pre-settlement cash to pay bills while you wait for the verdict, many pitfalls can add unnecessary stress to an already stressful situation. A pre-settlement loan can help get off your back much of the financial pressure spurred in the wake of an accident caused by somebody else’s negligence. But make sure that you do business with a reputed pre-settlement funding company and that you don’t fall into any of the traps mentioned above.

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Hi, I'm James George, the founder of Mind My Business NYC and author of this blog. I am an entrepreneur and internet marketer. My wish is that this website helps you to grow your business and achieve your goals.


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