Published 23 June 2024
Few events are as disruptive and life-changing as sustaining a serious injury at work. First, your injury robs you of the ability to work, then you are faced with a challenging journey through medical treatments, claim paperwork, and legal procedures. Meanwhile, your day-to-day responsibilities of bills, living expenses, and family obligations continue. With so much financial pressure and the uncertainty of how your injury will affect your ability to work in the future, loans or advances on your compensation claim can provide much-needed relief.
In this article, we’ll discuss the process of workers’ compensation and whether obtaining a workers’ compensation claim loan is an option.
In most states, Australians are entitled to workers’ compensation, regardless of who is at fault. This means that, for almost all injured employees, the beginning process of workers’ compensation is the same. This first stage is referred to as the statutory phase of workers’ compensation.
During the statutory phase, you’ll file a workers’ comp claim and, if approved, you will receive regular periodic payments (e.g. weekly, fortnightly or monthly). As you probably already know, these payments won’t be as much as your salary. Your workers’ compensation will also cover medical expenses, however, you may still be liable for some out-of-pocket medical costs. At this stage of the process, both you and your employer likely share a common goal: to get you well and back to work. Sometimes, though, that’s easier said than done, and an extended stay on workers’ compensation increases the likelihood of falling behind on your bills.
As the required legal process unfolds, you may be able to qualify for a traditional loan. Some lenders will consider your workers’ compensation payments as income, they’ll also look at other factors, such as your credit history. Unfortunately, the financial strain of being on workers’ compensation means many people miss payments, and, as a result, their credit history prevents them from receiving a personal loan. It’s an unfortunate Catch-22 of workplace injuries and workers’ comp.
Workers’ compensation claim loans, also called compensation claim loans or settlement loans, are different from typical personal loans. With settlement advance loans, approval is dependent on an assessment of your common law workplace injury claim.
This means you may still be approved, even if your credit history has taken a hit due to your workplace injury. Also, you won’t have to make a payment on your workers' compensation loan until you receive your settlement.
It's important to note that you can’t get a settlement advance during the statutory phase of a workers’ comp claim, even if you plan to pursue a common law injury claim. However, a compensation loan can help you manage the financial strain of a long work injury claim process.
A common law workplace injury claim can feel like a long, tedious process full of uncertainty and financial stress. Resolving work injury claims for damages typically takes at least a year, with those resulting from serious injuries taking up to several years.
Finally, reaching a settlement is cause to let out a big sigh of relief. However, it can take several months to receive the funds. After such a long process, those several months can feel agonisingly long. Fortunately, you may be able to borrow against your settlement with a post-settlement advance. These are compensation claim loans that you get after a formal settlement acceptance. These post-settlement loans will also have a lower interest rate than pre-settlement loans.
A post-settlement advance can help you get caught up financially and finally put your injury claim behind you.
You’ll quickly find that there are many litigation lending companies to choose from for your workers’ compensation loan. Sorting through them can be overwhelming, however, it's important to examine lending companies carefully.
Many lending companies will tempt you with a large loan that you can pay back with your settlement. However, you’ll end up paying much more in compound interest.
Always examine fees before taking out any loan. Some litigation lending companies charge high setup fees and ongoing monthly fees as well as interest. Most importantly, ensure your workers’ compensation claim loan doesn’t have an early repayment penalty fee.
You can tell a lot about a litigation lending company by the way it treats its applicants. Taking out a workers’ compensation claim loan is a big decision, and you deserve to be able to speak to real people who will answer your questions.
The process should be fast and efficient, and you should have the option of being able to apply online or using a paper version of the application. Your funds should arrive quickly after approval or, if you choose, be paid directly to your service provider. It’s always a good idea to seek out borrower testimonials.
Sustaining a serious injury at work can be a traumatic experience. In addition to navigating workers’ compensation and other legal processes, you also have to face rising financial pressure as your income drops.
When you open a common law workplace injury claim, you may qualify for a compensation claim loan. Taking out a settlement advance loan, however, is a big decision, so take your time and examine potential lenders closely.
At Brisbane Capital, we do things differently. We cultivate relationships with our clients and find solutions to help them navigate their financial challenges during the stress of dealing with an injury.
Ready to explore your options? We provide multiple, smaller loans with simple, clear fees and personalised support. Apply for a compensation claim loan today online or give us a call on 07 3726 6888, because the last thing you need right now is more pressure.