Managing Money During a Personal Injury Case: What Plaintiffs Need to Know

A personal injury case usually takes longer to resolve than most people expect. Medical bills keep arriving. Paychecks shrink or stop if the injury keeps someone out of work. The case itself can take months to negotiate, and longer still if it moves into litigation.

The waiting period after an accident and before settlement can be quite a financial strain on plaintiffs. Rent still remains due. Credit Card minimums remain. People don’t just wait.

They know their choices ahead of time and plan their wait. This guide explains what these costs are and the realistic options that plaintiffs have available to keep them afloat until their cases are resolved.

Settlements Take Longer Than Most People Plan For

If a car accident case has no serious injuries and it is clear that there is no fault, it can be resolved in 4-6 weeks. Injury claims take longer because a settlement demand can’t be sent until medical treatment is complete, which can take several months. After negotiations start, most simple cases settle within a few months to a year.

Cases that go all the way to trial take even longer. The U.S. Department of Justice estimates that only 3% to 5% of personal injury cases ever reach a courtroom. The ones that do can take two to three years from filing to verdict.

Discovery can be the longest process, because both parties exchange evidence and conduct depositions. It can be three months to a year, depending on the complexity of the case.

Discovery closes, and mediation is normally held afterward, and the vast majority of courts mandate mediation prior to trial. In most cases, lawsuits settle at this point, typically by the 12-18 month mark.

Medical Bills Don’t Pause While a Case Moves Through the System

Skilled medical professionals do not wait for settlement to receive compensation, although many will cooperate with patients who request it. Hospitals and clinics are likely to have hardship programs, payment options, or special payment plans for those who are facing litigation. Some providers even accept a medical lien in lieu of cash.

It’s not too early to reach out; it’s too late after the bill is sent to collections! Each provider individually should be asked if they provide a lien arrangement or deferred payment plan for your situation.

Make sure to put all agreements in writing because verbal ones will not last as long as a bill is passed to a new department or a collection agency acquires it.

Everyday Expenses Create the Most Persistent Pressure

Medical expenses are focused on because they’re obvious, and they are usually much bigger than other expenses. Some costs that cause more stress are day-to-day expenses like rent, utilities, groceries, and car payments – they never go away. Neither do they wait for sympathy from anybody.

This is compounded by lost income due to missed time off work, as many plaintiffs are also experiencing fewer hours or are not able to get back to the same job.

Most creditors, including utility companies and mortgage servicers, have hardship programs as well in this regard. This is where a quick phone call to tell them that we’re filing a lawsuit and that we’re wondering if the option exists for them to pay at a later date often gets further than you would think.

Traditional Borrowing Comes With a Catch Plaintiffs Often Miss

During an ongoing case, personal loans, credit cards, and financial support from family will still be available. They’re known, and for smaller deficits, they can be effective.

What they do have in common is that they all lead to debt—plaintiffs will be paying it back no matter what the outcome of the case is. If the case settles for less than what you were expecting, or if you don’t get compensated in the case whatsoever, this debt is not eliminated. There it is, making your financial situation even more challenging.

Family assistance, of course, saves on interest rates, but may cause problems if the case is prolonged beyond what anyone thought.

Non-Recourse Funding Works Differently Because Repayment Depends on the Case

Pre-Settlement Funding or a Lawsuit Loan is an alternative that offers plaintiffs cash for their potential settlement. The major difference between a personal loan and a special loan is that the special loan is non-recourse.

When companies fund a case, they usually review the documentation of the case, medical records, and attorney notes before granting an advance, as the amount of cash provided relies on the strength of the underlying claim.

If the case doesn’t result in a settlement, the plaintiff typically owes nothing back. This moves the financial risk to the funding company instead of the plaintiff. It’s one reason some people facing a long wait consider settlement cash advances with Tribeca instead of borrowing against their own credit.

However, since the funder assumes the risk of losing the case altogether, these advances will often come with a higher fee than a typical bank loan. If the plaintiff has a strong case and a long wait ahead, he may find the stability worth it. Other solutions may work better for someone closer to a settlement or with less documentation.

The Right Approach Usually Combines More Than One Option

Single solutions to financial pressures don’t appeal to few plaintiffs. Most charge a medical lien with their provider, a payment plan with a utility company, and maybe a smaller loan/advance to make up the difference. The specific combination will depend on how long the case takes and how much paperwork supports it.

The realistic timeline is easier to discuss with a lawyer right away, so that all other financial decisions become easier. A case that may take 6 months vs a case that may take 2 years requires a different approach.

By implementing that plan first, before the pressure mounts, plaintiffs will have a more favorable position, both monetarily and in the negotiation process. The early action will leave all doors open.