3 Dangers of Being in Debt
If you’ve been in an accident due to the negligent actions of another party, your expenses for treatment of injuries, medical bills, wages you’ve lost while undergoing treatment, and more might be mounting up. If you’ve brought a lawsuit against the at-fault parties, you may eventually receive a settlement, but in the meantime, you’ve got to pay the bills and daily expenses like rent/mortgage and food.
You may be, as a result, increasingly in debt. After all, doctors and hospitals are unwilling to wait to be paid. You may be going into debt to put food on the table or keep the lights on. Unfortunately, debt can pose some serious financial dangers.
Debt payments sap your cash flow
If you are in debt to credit cards or banks, you owe a debt service every month. These payments can sap your available cash until you’re going into debt to pay your existing debt. The more debt takes of your monthly income, the less positive your financial picture is.
You’re paying very high interest rates
If you are using credit cards to stay afloat until your settlement, you’re paying very high interest rates of around 16% to 22%. Even if you’ve obtained a bank loan, you could be paying significant interest rates.
High interest rates mean that you are paying much more for the money you’re borrowing than the amount you borrowed. If you borrowed $10,000 at 16% interest, for example, you are paying $1,600 every year just in interest rate charges – more than $130 every month.
Your credit rating can be negatively affected
Credit rating agencies look at your debt when you are assigned a rating. Unfortunately, having a lot of debt outstanding vis-à-vis the debt you are eligible for (maxing out your credit cards, for example) can negatively affect your rating. So can suddenly opening several new debt accounts, such as credit cards or loans. Plus, if you miss your credit card or loan payments, it can really hit your credit rating, sending it downhill.
Why does this matter? Because you can be turned down for things like car loans and mortgages if your credit rating is low. In addition, folks with higher credit ratings receive more advantageous terms when they go shopping for big-ticket items. It may be unfair, but it’s a reality. Your credit rating matters.
There Is a Solution to Debt
Fortunately, theirs is a financial solution for people waiting for a legal settlement. One that does not require them to go into debt.
It’s a lawsuit loan. “Wait,” you may be thinking, “isn’t a legal loan debt?” Well, no, it isn’t debt like a credit card or bank loan. It’s a non-recourse loan. If your legal case is successful, you’ll pay the loan back at a reasonable interest rate. But if it’s not successful, you won’t owe a thing. That’s what non-recourse means.
A legal loan is a bridge toward the settlement of your personal injury claim. You can use the money for any reasonable bill you have — mortgage or rent, food, and utilities. Plus medical bills, of course!
Best of all, a legal loan can provide you with the power not to jump at the first offer the defendant’s attorneys give. They may try to offer a low settlement if they know you really need money.
You can obtain a legal loan with just a simple application online. Approval can be received with no credit check, within 24 hours.
Let Lawstreet Capital help you with a legal loan to offset the risks of going into debt.