In most cases, the short answer to this question is “no.” The reason that lawsuit loans are not available to minors has to do with the goal of the settlement itself. In most cases, when a child has been injured in an automobile accident, medical malpractice, product liability claim or similar incident, the court wants to ensure the long-term benefit of the child. As a result, the court will typically have a highly structured, highly controlled payout system when it comes to dispersing the settlement funds. In some cases, this is true even if adults are involved in the same accident and lawsuit.

Lawsuit Loan vs. Structured Settlement

Lawsuit funding can often be obtained in cases involving adults where a loan company will provide money immediately to the plaintiff and collect the repayment only if and when a settlement is actually paid out. This allows plaintiffs to pay medical bills or routine expenses during a time when they may not be able to work due to the injury.

However, these loans are typically not available to children, although they may also be incurring immediate medical bills. The reason is that the court has very little control over how lawsuit loan money is spent and cannot protect the child from an unscrupulous parent or guardian who may spend the money inappropriately.

In the case of a minor, structured settlements are usually ordered. This means that an annuity is set up or a periodic payment structure is created so that settlement money is paid out over time. The court also inflicts extremely tight requirements so that money can only be used for the benefit of the child in terms of medical expenses or basic living expenses as well as future education costs.


Benefits of Structured Settlement

Although it may seem like an inconvenience when well-meaning parents cannot secure a legal loan for their child during a personal injury lawsuit, there are many advantages to the minor in structured settlements. These include:

* Settlement income is tax-free when it is paid out in a structured settlement.

* Interest earned in such an annuity is also tax-free.

* A structured settlement does not require any maintenance fees.

* Since the interest rate is fixed, usually somewhere between 3 percent and 10 percent, you are guaranteed a certain payment without concern about stock market activity.

* In addition, insurance commissioners regulate structured settlements in every state in the country. That means that this structured settlement is protected from future creditors and other judgments.

* The money is safe and protected, providing the child’s medical needs, educational needs, and daily living expenses until the child reaches the age of 18. Typically, there is still money left when the child becomes an adult.