Michigan attorney gives reasons why workers’ comp lawsuit funding is a bad idea.
We understand that many people live paycheck-to-paycheck and getting cut-off from weekly checks can result in extreme financial distress. Unfortunately, attorneys cannot ethically loan money to a client so the promise of quick money from workers’ comp lawsuit funding companies sounds like an attractive option when someone is unable to pay rent or put food on the table.
Michigan law prohibits excessive interest rates when an individual is loaned money, but an exception is allowed for lending institutions. It is normal for credit card companies to charge interest rates exceeding 20%. This article should be a wake-up call for anyone who is considering workers’ comp lawsuit funding. Here are some reasons why it can be a bad idea and how to get relief in other ways.
5 Reasons Why Workers’ Comp Lawsuit Funding Is A Bad Idea
- Reputable companies won’t loan money
We are frequently contacted by workers’ comp lawsuit funding companies. They call us because one of our clients has filled out an online request form or called a 1-800 number. The companies funding the money never approve the loans when they find out that settlement money goes straight to the client and cannot be held in trust. This is usually the end of the road and a huge waste of time.
- High interest rates and excessive fees
Many of these workers’ comp lawsuit funding companies offer bad deals. Individuals can expect to pay high interest rates and excessive fees. We have heard of some companies charging interest rates over 50%!
- Potential conflict of interest can impact representation
Workers’ comp lawsuit funding companies quickly become a nuisance to lawyers. They want to discuss confidential information, including medical, before releasing any funds. Frequent calls about case status and pressure to settle can be counterproductive.
- There are better options available to get money
Michigan law already has a procedure for seeking a loan from the insurance company. A disabled employee who is currently receiving wage loss benefits can seek an advance lump sum payment. The insurance company is allowed a maximum 10% interest per year. Future wage loss benefits will be reduced until the advance is paid back. A magistrate can order payment of the loan if the insurance company says no but good cause is shown.
- Settlement is always the better option
Our clients typically settle their work injury claims for a lump sum cash payment. This allows them to do their own medical and vocational rehabilitation without having to deal with the insurance company. Money can also be used to start a business, pay off debt, or for retirement. Settlement provides the financial relief that many people need to get back on their feet after a workplace accident. Nothing is owed unless a person recovers money and attorney fees are limited to a percentage of what is paid.
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Our work injury attorneys have been exclusively helping injured workers in Michigan for more than 35 years. Our attorneys can help you better understand Michigan workers comp laws and what happens after someone has been hurt on the job. 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 35 years. Call (844) 316-8033 for a free consultation today.