How to pay bills while waiting on a settlement

Claiming on your workers’ compensation or personal injury insurance lets you receive financial benefits for medical bills, lost wages, and even pain and suffering.

However, financial settlements take time, and you need to be able to pay bills and cover living expenses while you’re waiting for your expected settlement to come through.

If you need money while waiting for a settlement, there are a few budgeting strategies and legal funding options that can help you stay afloat.

This blog is a practice guide to paying your bills and covering expenses while you wait for your case to resolve.

Understanding the timeline of settlements

The timeline for a workers’ comp or personal injury lawsuit is typically as follows:

• Your injury occurs, such as a workplace injury, car accident, or harm from medical malpractice
• You receive immediate medical treatment
• You report the injury or incident to your employer (if relevant) and insurer
• You file a lawsuit seeking compensation
• Your claim is investigated by your attorney and the defendant’s insurance company
• Your claim is approved or denied
• If your claim is denied, court proceedings take place
• Your benefits are disbursed

In simple cases where the defendant admits responsibility or the case involves strict liability, these settlements can go from start to finish in just a few weeks.

However, most cases are known to continue much longer, especially if the defendant’s insurer disputes your claim.

On average, it takes around 12-18 months to reach a settlement for a workers’ compensation case.

And negotiating a personal injury claim can take around 3-9 months.

That said, there are a few factors that can affect the precise timeline of your claim, such as:

• How quickly you file your claim
• The severity of your injuries
• The duration of the investigation to gather evidence
• Disputes regarding liability
• Allegations of comparative fault
• Whether your claim involves a government entity
• The willingness of the insurance company to negotiate a fair settlement
• How quickly your attorney and those representing the defendant respond to communications
• The experience and expertise of your attorney

Where possible, defendants’ insurance companies try a lot of tactics to reduce your settlement and save money. This could involve deliberately dragging out the case or acting in bad faith.

As such, it’s important to hire an experienced specialist attorney who knows how to speed the process along and build a powerful case in your favor.

Phalen Law has over 50 years’ experience in handling workers’ compensation and personal injury lawsuits for clients through Kansas and Missouri.

We do our best to resolve matters before they reach the court, making your settlement as fast, fair, and stress free as possible.

If you’re thinking about filing a claim for compensation, contact us today to start an efficient claims process.

Keep Reading: What to Look for in a Workers’ Comp Lawyer

Prioritizing your expenses

When you need money while waiting for a settlement, it’s important to evaluate your expenses.

Let’s keep things simple and split expenses into just two types:

• Essential: Things you simply can’t do without
• Non-essential: Optional expenses that you can cut to save money

When creating a budget to pay bills while awaiting financial compensation, you should figure out how much you need and where you can make savings.

To help you out, here are some practical tips on creating a budget to stretch your funds:

• Review your spending: Gather your financial documents from at least the last two years to calculate your typical income and outgoings, including any savings you have. Use this information to figure out what money you have available and what you usually spend it on.
• Calculate expenses: Divide your outgoings into essential and non-essential expenses. This will give you a rough idea of how much you need to spend in a month and where you can make savings.
• Include new costs: Following your injury, it’s likely you’ll need to pay some medical expenses and similar costs that you haven’t covered before. Speak with your treating physician to establish what these costs are likely to be, and add them to your monthly outgoings.
• Create a budget figure: Based on advice from your attorney, work out how many months’ worth of expenses you’ll need to cover before your expected settlement comes through. To be safe, add around 30% to the anticipated figure.
• Plan your return to work: If your injuries prevent you from working, ask your doctor how long it’ll take for you to be fit for work, even in a limited capacity. This will affect how long you need to budget for before you have new money coming in.
• Cut non-essential expenses: Many non-essential expenses are luxuries we use to treat ourselves. Cutting these back is likely to save you a significant amount of money.
• Explore free alternatives: Rather than pay for streaming services or new books, find free alternatives to non-essential expenses such as YouTube and library services. If you play video games, consider downloading free games or trying out cheaper indie titles rather than paying $60 for a new release.
• Quit smoking or drinking: Reducing consumption of cigarettes and alcohol is a lot easier said than done – and can be quite irritating as a suggestion. But when money is tight, you might find it to be the ideal time to cut down. After all, quitting smoking saves an average of $1,890 a year in Kansas, or a massive $3,220 in Missouri!
• Cook at home: If your injuries don’t keep you from cooking, make food at home using affordable ingredients rather than ordering in or eating out. You could save almost $250 a month, especially if you cook in bulk to reduce electricity or gas usage.
• Financial assistance options: Habitual savers or those on a lower income might already have lower-than-average non-essential expenses. But if you still don’t have the money to cover your living expenses, there are a few pre-settlement financial assistance options you can explore instead.

Pre-settlement financial assistance options

Personal loans

This is a popular option for those who need money while waiting for a settlement.

Personal loans are typically offered by banks and credit unions. They can be:

• Secured: You offer your home, vehicle, or other valuable asset as collateral
• Unsecured: No collateral is required

Secured loans tend to have better rates and terms. That’s because they pose less of a risk to lenders.

To be eligible for a personal loan, you typically need a good credit score and a stable source of income.

Pre-settlement lawsuit loans

Applying for pre-settlement funding is a low-risk way to get cash in advance of your settlement. 

Unlike personal loans, lawsuit loans don’t come with compound interest. And you don’t need a good credit score or source of income to get one.

Best of all, if you lose your case, you won’t have to pay back your pre-settlement funds.

Community and nonprofit resources

Support from community and charitable organizations can help you pay for groceries, utilities, rent or mortgage payments, and other living expenses until your settlement comes through.

The resources available differ depending on where you live. So it’s best to ask your attorney for a list of local nonprofit organizations that might be able to help you.

Communicating with creditors

Taking out a loan to cover expenses always carries some risk. 

But if you fall behind on payments, you can negotiate a payment plan with your creditors to help you catch up.

To negotiate a fair debt repayment plan:

• Create a budget using the tips we’re given above to prove to your creditors that you’re making a fair offer and doing your best to settle your debts
• Calculate what you can afford to pay to cover your debts
• Contact your creditors by phone, email, or letter to explain why you’re struggling to keep up with payments and discuss a repayment plan

Another option is to request a bill deferment or reduction in interest payments. You can generally negotiate these for:

• Installment loans
• Mortgage loans
• Personal loans
• Student loans
• Credit cards
• Auto loans

During the COVID pandemic, these types of deferments or reductions became commonplace. So lenders now have more robust procedures to support struggling borrowers.

These types of agreements don’t even impact your credit score. So you can ask for assistance without worrying about how it could affect your financial future.

Start by contacting the company with whom you have a loan agreement. Explain your situation and ask them if it’s possible to defer the payment, or to reduce interest on your missed payments for an agreed period of time.

Be aware that interest will still accrue on a loan during the deferment period. And pausing payments means your repayment term will typically be extended by the same number of months.

Temporary income opportunities

Even if you can’t return to work while recovering, there are plenty of temporary work-from-home opportunities that can earn you some extra cash.

Depending on your skills, profitable home-based gig work can include:

• Work-from-home temp jobs found on sites like Indeed
• Online tutoring
• Freelance writing or graphic designing
• Virtual assistance
• Transcription
• Data annotation
• Buying and reselling goods
• Health coaching
• Recruiting

You could also consider selling some of your unused items or assets.

Amazon, eBay, and Facebook marketplace are all popular options for making quick cash on second-hand goods. And you could sell old clothes on specialist sites like Depop.

Avoid financial pitfalls

Risks of high-interest payday loans

Payday loan providers would have you believe that you can get a quick, easy loan to bridge any financial gaps.

At first, this seems like a great idea. But be warned that payday loans come with excessively high interest rates.

You can typically expect to pay interest of around 1,250% APR for a single payday loan!

And within a month, almost 70% of borrowers take out a second payday loan.

This creates a vicious cycle that can leave you in a significantly worse financial position.

So if you need to borrow money, always look to less predatory lenders for support.

Don’t overspend your anticipated settlement

A fair financial settlement should cover your medical bills, lost wages, and other expenses brought about by your injuries.

So even if you need to pay out of pocket while waiting for disbursement, you should be financially stable once your claim has been resolved.

However, the precise amount you receive is difficult to estimate. And it could change based on court proceedings.

Therefore, you should be careful not to spend frivolously during your recovery period. Otherwise, you could find yourself in a difficult financial position even after receiving compensation.

Make your claim more efficient with Phalen Law

As veterans in workers’ compensation and personal injury law, our team knows what steps to take to build a strong case and process your claim as quickly as possible.

And even if the defendant’s attorney tries to drag out the process and force you to accept a lower settlement, we can push past obstacles to reach a fair resolution.

That’s why claimants throughout Kansas and Missouri rely on the specialists at Phalen Law for a fast, efficient claims process that pursues suitable compensation.

Contact us today or complete our Free Case Evaluation form to give us the details of your case.