How to Get Settlement Loans for Workers Comp

When you get injured on the job, you are entitled to workers’ compensation. But this doesn’t mean you’ll receive your benefits the day after your claim. In some cases, it can take weeks. But most of the time, it involves a lengthy legal battle that may take years.

While you’re fighting for your benefits and recuperating from your injuries, you’ll most likely miss work. No work means no income. But your bills and mortgages won’t stop just because you’re not working. Plus now, you’ll have medical bills to worry about too. With no money coming in, it can be very hard to make ends meet.

This is a dilemma most injured workers are familiar with. That’s why many are tempted to settle for a much lower compensation amount just to avoid a lengthy court process. Some have even resorted to loan sharks just to avoid sleeping on the streets.

But unknown to many, there’s a much better option: settlement loans.

What is a Settlement Loan for Workers Comp?

In a nutshell, a settlement loan is a type of cash advance in anticipation of benefits or settlement. It’s also known as lawsuit loans, settlement funding, or presettlement funding. It can apply to many types of lawsuit settlements but in this case, it refers specifically to workers’ compensation.

If you have an existing workers comp claim, some lending companies will let you take out a loan on it. Once your benefits are approved and you get your settlement, the loan amount plus the interest will be deducted from your payment. Most companies also offer a no-risk loan. Meaning, you won’t have to pay anything if your benefits are denied.

The processing time for settlement loans tends to vary. But in general, legal funding companies release cash advance loans as early as 24 hours after application. Though, with complicated worker compensation claims, it may take a few days.

How to Apply for a Settlement Loan

1. Check Legal Requirements

First and foremost, you need to check if your state allows presettlement funding. And if it does, what are the legal limitations and requirements to apply for one.

Lawsuit funding regulations vary per state. In most places, this type of loan is unregulated. But states like Wisconsin, Maine, Oklahoma, and Tennessee have strict laws to ensure that lenders are treating their customers fairly.

2. Hire a Workers Compensation Attorney

Legal funding companies will work with your workers’ compensation lawyer to determine how likely you are to get a settlement and how much benefit you will get. This means that you need a workers comp attorney to be able to get a workers comp presettlement loan. Besides, having a lawyer working on your workers’ comp lawsuit will increase your chances of getting your claim approved. 

If you don’t have one yet, don’t hesitate to reach out to us. Atty. Victor Malca has already helped thousands of injured workers in Florida. He can help you get your workers’ compensation settlement too.

3. Choose a Reputable Lender

As mentioned, lawsuit loans are largely unregulated. As such, it pays to do thorough research first instead of grabbing the first settlement loan offer that comes your way. Your workers’ comp attorney may also recommend lending companies that they’ve worked with in the past. Thoroughly evaluate your choices, compare interest rates, and payment terms to make sure you’re not getting the short end of the stick.

4. Review the Legal Funding Agreement

This goes without saying. Whether it’s for a settlement loan or not, don’t sign any type of agreement without making sure you’ve read and understood the terms stipulated therein. Check if the interest rates are within the legally allowed amount and if the terms therein are allowed by law.

To be safe, let your workers comp attorney review the contract first. They’ll usually advise you if the lending agreement is favorable or heavily biased against you.

5. Collect Your Settlement Loan

After you submitted your loan application and signed the lending agreement, an agent will be assigned to you. They’ll talk with your workers’ comp lawyer to assess your chances of getting a workers compensation settlement. If your loan is approved, you’ll usually have the funds in your account within 24 hours.

Workers compensation claim form.

How Much Settlement Loan Can You Get?

Obviously, you can’t take out a settlement loan in the full amount of your benefits. Besides, benefit amounts can vary significantly. So there’s really no way of knowing how much you’re going to get until after it’s approved. This means that your settlement loan can vary too.

Most companies offer anywhere from $500 to as much as $250,000. But in general, how much you’ll get depends on factors like:

1. Your state

Workers comp laws vary per state as are the lawsuit funding regulations. So most lending companies adhere to a sort of scale that rates each state based on the ease of getting settlement loans. States like Florida are generally rated high because it’s much easier to get benefits here than in others.

2. Your disability

The severity of your disability will determine how much you’re going to get. Naturally, this will also affect how much loan you can take out on your benefits.

3. The nature of your injury

For an injured worker to qualify for workers comp, they must prove that their injury is work-related. In some states, you’ll also have to prove that the injury is due to the negligence of your employer. So if there’s some doubt as to how your injury happened or who’s at fault, they might be less willing to lend you a huge amount.

4. The Medical Treatment You’re Scheduled to Receive

Your workers’ comp settlement will include lost wages and medical benefits. As such, the type of medical treatments you’re entitled to receive will also affect your settlement. For instance, an injured worker who has to go through brain surgery will most likely have a more substantial medical settlement than someone who broke an arm. Thus, lenders are more inclined to give them a higher settlement loan.

Will You Qualify For a Settlement Loan?

Since payment for lawsuit loans depends primarily on you winning your claim, your eligibility also depends on the likelihood of that happening. The specifics vary per lending company but in general, you can borrow money if:

  • you have a pending workers’ comp claim;
  • your injury is work-related;
  • you have a workers comp attorney handling your case (having one increases your chance of getting the benefits you deserve);
  • you’re of legal age;
  • your state allows lawsuit cash advance loans

Some companies may also check your claims history. But as a rule of thumb, the stronger your claim is, the more likely you are to get approved for a loan.

Should You Get a Settlement Loan?

There’s no question that settlement loans are indeed a huge help if you’re strapped for cash while waiting for your first benefit check. It also helps you avoid settling for a workers’ comp amount that’s way below what you’re entitled to.

However,  interest rates for this type of loan can run from 2% to 4% per month. While this may sound reasonable, that could easily translate anywhere from 24% to 48% per year. If your workers’ comp case takes years, you may end up paying double or triple the amount you originally owe.

Besides, as mentioned, settlement funding companies are largely unregulated. The industry is even often criticized for having usurious interest rates. Some lenders also charge a lot of one-time fees that can further reduce the net loan amount you’ll receive. 

This is why workers comp lawyers may sometimes advise their clients against availing a settlement loan if they think it will do more harm than good.

But at the end of the day, the decision is yours to make. If you’re in dire need of cash and are having second thoughts about getting a settlement loan, consider other options like:

  • disability payments
  • insurance proceeds
  • borrowing against your 401(k)
  • taking a loan from your bank or credit union
  • borrowing from friends and family

Keep in mind that the above financing options also come with their own pros and cons. So whatever you choose, make sure to think it over first or discuss it with your workers’ comp lawyer. They handle lots of cases like yours so they can offer a more valuable opinion on the matter.


Victor Malca P.A. has over 25 years of litigation experience in Workers Compensation and Social Security Disability lawsuits. His experience and continued success in fighting for his clients puts among the most trusted workers’ compensation lawyers in Florida. Our area of expertise is in representing injured workers on compensation benefit cases and disabled individuals claim social security disability benefits.

Our unwavering advocacy for employee rights and privileges are recognized by our past clients across South Florida. Book a free consultation today.

Judy Ponio is a writer for Victor Malca LawAbout The Author

Judy Ponio is a writer for Victor Malca Law P.A. and enjoys helping people with questions about social security, workers compensation, and other serious matters involving people’s livelihood. She is not an attorney and her writing should not be considered legal advice.

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