MONTGOMERY, Ala., May 6, 2016 /PRNewswire/ -- Earlier this week, the Alabama legislature refused to act on HB 395, a bill sponsored by Rep. Chris Pringle and forwarded by the insurance industry that would have eliminated the availability of consumer legal funding in the state. When the Legislature adjourned on Wednesday, the bill effectively died on the floor, marking a win for consumers.
"Legislators in Alabama recognized the importance of this product to the wellbeing of their constituents and didn't bend to insurance industry cronies" said Rob Johnson, Executive Director of the Alliance for Responsible Consumer Legal Funding (ARC). "With 76% of households living paycheck-to-paycheck, accidents can be devastating to a family and a major burden financially. Savings only goes so far. People need options."
Consumer legal funding—also known as pre-settlement funding—is a specialty financial service that allows plaintiffs pursuing an insurance claim after an accident to sell part of the potential proceeds of the claim for cash now. Unlike a loan, there is no obligation to the funding company if the consumer does not have a successful outcome in their claim. And because it's the sale of an asset, it can't affect a person's credit or put them into collections.
Insurance companies have pushed to eliminate the availability of legal funding in states across the country because it's used to help make ends meet when a claim is being dragged out. "When a person can't pay the rent or put food on the table, they are much more likely to settle for a low, unfair offer," said Johnson. But, for someone who has been injured in an accident, settling prematurely can have a lasting impact on their financial wellbeing as they continue treatments and attempt to get back to work.
"You never know you need the option until you've been in an accident," said Johnson. "Then it can be a lifesaver."
It was for Janet from Mobile, Alabama, after she was the victim of a car accident. "The crash left me with an injured back, a severe concussion, and a totaled car. Unfortunately, these injuries will affect me the rest of my life and have required extensive physical therapy," she said. "Luckily, I found out about consumer legal funding before it was too late…[it] has helped alleviate the stress of my life being flipped upside down and eliminated having to make the impossible decision to pay bills or pay for medical treatment. Consumer legal funding helped me get my life back, and I am very grateful."
It was also a lifeline for Mia from Huntsville, Alabama, after she was injured on the job and left unable to work. "I would have lost both my apartment and my car, which would have left me homeless. Legal funding helped me maintain control of my life," she said.
"In state after state, legislators have acted to protect their constituents from insurance companies who are motivated to maintain profits, to the detriment of everyday people. Alabama got it right this time," said Johnson.
The Alliance for Responsible Consumer Legal Funding (ARC) is a coalition established to preserve legal funding as a choice for the many Americans who have suffered an unexpected economic loss due to an accident and have a pending legal claim. Legal funding can help families pay for immediate personal needs such as rent, mortgages, car repairs, utilities and groceries while they wait for their claims to settle fairly. ARC trade association promotes practices and regulations that lead to informed decisions between individuals and their attorneys, so families have more options—not fewer.
Contact: Crystal Olsen
Alliance for Responsible Consumer Legal Funding
SOURCE Alliance for Responsible Consumer Legal Funding (ARC)