Michigan attorney explains how to get a workman’s comp loan (advanced payment option) or lump sum cash settlement.
Getting hurt at work can turn a person’s life upside down. Many people live paycheck-to-paycheck and even a temporary loss of income can result in a financial disaster. Here is some information about workers’ comp settlement loans that can help ease the burden.
Employees who are hurt on-the-job are entitled to wage loss benefits. It pays 80% of a person’s after-tax average weekly wage when they cannot work. This calculation includes money for overtime and discontinued fringe benefits. It is subject to a maximum payment ($1,134.00 for 2024).
Many of our clients want to settle their workers’ comp claims. They can trade workers’ comp benefits for a lump sum cash payment. Money can be used for any purpose including additional medical treatment, vocational rehabilitation, paying off debt, or even retirement.
The value of any settlement is going to depend upon future medical needs and how long a person is expected to be disabled. Our experience shows it is a good option when an employee is ready to find a new job and move on with his or her life.
What are settlement loans and pre-settlement funding?
Lawsuit funding companies will provide settlement loans and pre-settlement funding to people with a workers’ comp case who need money now. It is difficult to get a settlement loan for a work comp case in Michigan because money goes to the claimant and not his or her lawyer for safe keeping. This causes worry about getting paid back. If you do get a loan expect high interest rates and fees.
Lawsuit funding companies also become a nuisance to lawyers. They want to discuss confidential information, including medical, before approving any settlement loan. Frequent calls about case status and pressure to settle can be counterproductive.
We think getting an advance payment is a much better option. This can be accomplished through your lawyer and the insurance company responsible for payment of workers’ comp benefits.
Why would I need a settlement loan for my workers’ comp case?
Disabled employees may need a loan on a workers’ comp settlement to help pay for job search efforts, deal with emergencies, pay bills or even to start a business. Remember, workers’ comp is a safety net for people hurt on-the-job and It is not always enough to pay bills or help transition to a new career. It only pays 80% of the after-tax average weekly wage and covers medical treatment.
Can I get a loan from my workers’ comp settlement?
Michigan law allows a disabled employee to ask for a settlement loan from workers’ comp in the form of an advance payment of weekly benefits. Only individuals who are currently receiving wage loss benefits will qualify. Interest can be charged by the insurance company at a rate of 10%. It is common for weekly checks to be reduced until the money is paid back.
A workers’ comp loan does not mean a disabled employee gives up all of his or her benefits. Medical should continue to be paid without interruption. Weekly checks should resume once the loan has been paid back.
How to get a loan on my workers’ comp settlement?
Insurance companies oppose workers’ comp settlement loans because there is a possibility that a disabled employee recovers before money is recouped. If the insurance company objects, an Application for Advanced Payment can be filed. A magistrate will decide if a loan should be paid after listening to both sides.
Situations that might justify a loan include needing money for an emergency, transportation costs to and from a new job, or business ventures that have a reasonable chance of success. Needing to pay off debt is not usually considered a valid reason.
There are many times where the insurance company and disabled employee agree to a settlement but must wait to finalize it. Unfortunately, it can take weeks or months to get all of the issues resolved. It is possible to get a settlement loan in the meantime. But the terms might not be favorable.
Please remember that every situation is different, and it is best to speak with an attorney before acting. Michigan has some unique rules about advance payments, and you have to be careful. We strongly recommend speaking with an experienced attorney before entering into settlement negotiations or agreeing to any loan.
Have questions about a settlement loan? Contact our lawyers for a free consultation
To speak with an experienced attorney about a workers’ comp settlement loan, call us now, or fill out our contact form for a free consultation. There is absolutely no cost or obligation. We’re here for you.
Our attorneys have been exclusively helping injured workers in Michigan for more than 40 years and can help you better understand workman’s comp laws and explain to you in more detail how the workers’ comp settlement process works after a work injury . To see what our own clients have to say about the caring, compassion, and communication they received from us, you can read in their own words about their experience here on our testimonials page from clients we have helped.
Michigan Workers Comp Lawyers never charges a fee to evaluate a potential case. Our law firm has represented injured and disabled workers exclusively for more than 40 years. Call (844) 201-9497 for a free consultation today.
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