Inflation to Hit Personal Injury Plaintiffs Hard
There is no shortage of news these days regarding an overall increase in price levels throughout the economy. Prices for essentials such as gasoline, groceries and other items have increased dramatically in the last 12 months. Personal injury settlement loan customers can expect the same to continue.
In response, the government increased entitlements such as unemployment benefits and the like. This led to a slight decrease in applicants for lawsuit funding services throughout the industry.
However, dark clouds loom as the rising cost of goods and services generally caused by an increase in the money supply, could make the financial difficulties facing many personal injury litigants even more severe.
The Current Climate
The COVID-19 pandemic, and the response by governmental bodies, resulted in an economic climate never before seen. Fear caused government forced shutdowns and a reduction in general business activity. Small businesses were hit especially hard. This reduction in economic activity prompted different responses from governmental and the financial system in an effort to keep the economy going.
Part of the response was the Payroll Protection Program which was designed to keep people working by offering “forgivable” loans to businesses. Then there were all of the Covid Relief Bills totaling literally TRILLIONS of dollars. Other spending allowed unemployment benefits to be extended AND increased. Many of these benefits are still in place today.
What is the effect of directly injecting money into a financial system that is disproportionate to the amount of economic activity in that system?
Well, the initial effect is that people who were financially strapped had a reprieve. That is, the new money could be spent on any type of expense. This eased the financial burden individuals faced not only because of the response to COVID-19, but also others who were already financially strained.
The bad news is that directly injecting money into the system creates a situation where there are more dollars chasing the same amount of goods and services. The result is an increase in prices for those things many people need such as utilities, gasoline, food, etc.
Couple this with the supply issues caused by mandatory work stoppages and you can see why, due to supply and demand, how the cost of lumber could increase 250% in a year. By any measure, prices have been rising dramatically. It is unsure if it will get out of control.
How Does this Affect Personal Injury Settlement Loans?
If prices of essential items are rising, that means there is less money available for other things such as college tuition, medical treatment, car payments, rent, vacations, or anything else you can think of. Injured parties are even more compromised because their injuries often prevent them from earning as much as they did prior to their injuries.
Personal injury settlement loans offer personal injury plaintiffs the ability to endure the long, drawn out litigation process. Personal injury cases can take years to resolve. Inflationary concerns can only add to the problem. Plaintiffs have even less money because everything is more expensive.
Having everything cost more can result in many of these plaintiffs accepting “low-ball” settlement offers simply to have enough money to meet immediate needs. If their attorneys have the time to properly litigate the case, their ultimate recovery would be larger.
This situation has always existed as the purpose of lawsuit loans was always to level the playing field between financially strong insurance companies and individuals with less ability to endure the process. Inflation only adds to the insurers’ advantage.
Personal Injury Settlement Loans offer the opportunity to tap into a normally illiquid asset – a lawsuit. By offering plaintiffs the ability to sell a part of their future settlement, personal injury settlement loan companies help clients get the cash they need, when they need it.
If you have any other questions about personal injury settlement loans, please do not hesitate to contact Fair Rate Funding. We have been leading the lawsuit loan industry since 2007 and are here to help. Call us now for more information. 888-964-2224