You’ve gotten yourself into a bit of a pickle. Maybe you need to pay for a divorce or perhaps you’re being sued by someone who tripped and fell on an exposed root outside of your home.
There are so many ways you can rack up legal fees, but not so many ways to pay for them. Here are six that we think are important to consider.
1) Payment plans
Elizabeth Ricci is a lawyer with Rambana & Ricci, PLLC in Florida. Her specialty is immigration law, and she says most of her clients use some payment plan to cover their legal fees, adding that many other professionals also accept payment plans.
For example, if a client pays in full, I offer a small discount (5%). If that’s not an option, I usually allow the client to pay half down and the other half in three payments. My daughter’s orthodontist offers a similar plan”
She explains, “For example, if a client pays in full, I offer a small discount (5%). If that’s not an option, I usually allow the client to pay half down and the other half in three payments. My daughter’s orthodontist offers a similar plan.
We take payments because the processes can take a while and it is hard for people to come up with legal and filing fees all at once.”
Payment plans can work in a variety of ways, but the basic idea is that you set up an agreement with your lawyer to pay your fees in smaller portions over time.
Bartering is the exchange of one service for another. If you’re an accountant, for example, you might offer your services during tax time in exchange for legal work.
Ricci says some law firms are open to bartering, but advises, “Both the service provider and the recipient should be careful about reporting the value of the bartered service on his or her taxes.”
3) Credit cards
Credit cards are accepted by most law firms and can be a simple way to take care of your fees if you have a high enough credit limit to cover the costs. Lenders will check your credit report to determine whether or not to approve you.
The upside of using a credit card is that you can pay your lawyer in full upfront, then make payments on your card as long as you need to. Some cards sweeten by offering unique benefits and rewards that you’ll want to look into.
For example, a card with a no-interest introductory period is one benefit that would be particularly helpful in a situation like this. You will not be charged any interest during the promotional period. So, if you’re able to pay off the balance before the promotional period ends, you won’t pay any interest at all. If not, be careful because you will begin seeing interest charges as soon as the period ends.
The downside to using a credit card is that you may end up paying more in the long run, depending on your interest rate and how quickly you pay off the amount.
4) Legal loans
Otherwise known as a personal loan, this could could be a good option depending on your situation. A lender gives you a lump sum (based on your credit and financial profile), which can be deposited into your account as soon as 24 hours after being approved.
Along with the loan amount, your credit and financial profile will also determine your interest rate, fees, and repayment term. Deciding whether or not a personal loan will help you pay your legal fees will depend on all of these factors.
You can get a pretty accurate idea by seeing what you qualify for without hurting your credit score. That way, you’ll know whether or not it’s worth it to submit an application and receive a hard inquiry on your credit.
Ricci says, “There are several companies that offer legal loans, but the borrower should be aware of high interest rates.”
More and more small law firms are beginning to accept bitcoin. Bitcoin is a digital, “universal” currency. Transactions take place directly with no intermediary involved, such as a bank or lender. Rather than being controlled by any central authority, like the Federal Reserve, this method of payment is controlled by computer systems.
6) Lawsuit loan
If you are suing and expect to receive compensation if you win, you can also consider a lawsuit loan. While commonly referred to as a lawsuit loan, it’s not technically a loan. It’s a type of pre-settlement lawsuit funding, like a cash advance.
This option is most popular with people involved in personal injury or work-related injury claims. It can get them the funding they need to help cover their legal fees and personal expenses as their case is being settled.
This should be an absolute last resort, though, as pre-settlement funding is risky. Many times, a processing fee is charged on top of the principal and interest. So, between the high interest, fees, and principal, you may owe more than the settlement amount that you won in court, therefore defeating the purpose.
6-step game plan
If you find yourself stuck in an unavoidable legal battle, odds are you aren’t going to be happy when your lawyer’s invoices start coming in.
Figuring out how to pay for legal fees that you can’t afford can be stressful. But you can alleviate some of the financial burdens by following this six-step game plan:
- First, ask your lawyer about the possibility of a payment plan. Typically this is the best option because you will have low or non-existent interest.
- Think about what skills or services you could offer for bartering, then ask if your lawyer would consider this as an option.
- If you have decent credit, try a credit card Check out one with a 0% introductory rate, then plan to pay it off before the interest kicks in. You can start your research here.
- If these options aren’t feasible, seek out a personal loan. You can start by checking if you pre-qualify, then you’ll know that’s an option if all other options fall through.
- Ask your lawyer if he or she accepts bitcoins, a method of payment that uses virtual currency. This option cuts out the middleman (i.e., banks and lenders) and is controlled by computer systems, rather than a central authority (like the Federal Reserve).
- Consider a lawsuit loan as a very last resort, and make sure you know what you’re getting yourself into before committing.
You can get started today by getting personalized, pre-qualified loan offers from top lenders. This does not require a hard inquiry, so it won’t hurt your FICO score. Then, compare each offer to find the best option for you.
Heather Skyler writes about business, finance, family life and more. Her work has appeared in numerous publications, including the New York Times, Newsweek, Catapult, The Rumpus, BizFluent, Career Trend and more. She lives in Athens, Georgia with her husband, son, and daughter.