July 5, 2016
The NFL has reached a legal settlement with former players who suffer from cognitive impairment as a result of concussions and on-the-field collisions. Payouts could reach as high as $5 million each, but will take months to arrive—and some players don’t have that long to wait.
Financially strapped with no money left from their playing days, some players have turned to loans with terms that seem too good to be true: tens of thousands of dollars borrowed with no money down and no due date for paying it back. Zeroing in on the former players because of the settlements they stand to receive, the lenders have imposed exorbitant interest rates of 40 percent or higher. Lending against a settlement payout is a legal but largely unregulated business. The high interest rates start as soon as the loan is signed and can take a huge bite out of the amount the player eventually receives in a settlement.
Opponents of the practice call it predatory, but some former players see the loans as an opportunity to pay their bills and repay debts. LaCurtis Jones, 43, played parts of two seasons in the NFL in the 1990s and two more seasons in Canada. He has no money left from his playing days and wants to borrow $100,000. Expecting to receive a six-figure settlement, he believes he can pay back what he owes. He says that he doesn’t want to get into a lot of debt and is looking for someone to advance him the money.
The lenders also take on a sizable risk; players who don’t qualify for a settlement don’t have to repay their loans. Lenders use the settlement itself as collateral and deny the charge that they are taking advantage of people who have impaired mental capacity.
As a safeguard, one company representative requires that his clients stand before a judge and testify that they understand the terms of their loan. For former players who need money sooner than later, the loans might look worthy of the risks involved.
If you have questions about structured settlements, loans based on these settlements or lending practices, you will need legal counsel to ensure that no one takes advantage of you. Contact our office for answers to your questions.