THE BLOG
05/17/2013 11:48 am ET Updated Nov 08, 2014

How Can I Pay for Legal Fees I Can't Afford?

Huffington Post Reader Question

Dear Steve,

I have large lawyer fees I need to have financed but I am not sure where to turn.

I have left some messages and sent some e-mails and searched endlessly on line but I keep finding scams (I check before I apply).

Where can I go to get a peer to peer loan or another place to get a large unsecured loan?

If I don't get the legal fees taken care of I could lose everything but I can't find a lender that isn't a scam, extremely high interest, or real.

Why aren't there more avenues out there for legal fee's that don't include injury lawyers?

Catie

Don't miss my free Get Out of Debt - "How To" Guide Series on a number of topics, for loads of practical advice, tips, and help to beat back debt. - Click Here

Answer

Dear Cathie,

Thank you for your question. It's an area I've never spent much time investigating and your feedback that most lenders you've been running into are less than desirable is helpful.

With almost any type of loan your credit score is ultimately the single most important deciding factor. The loans it is not that important are usually the last ditch lenders with huge interest rates like payday lenders and title loan companies. But I'd never suggest you use either of those to fund legal fees.

Dealing with paying for lawyer fees can be overwhelming. Good representation does not come cheap. But what is someone to do?

If a lender is telling you your credit score doesn't matter then that's a great sign you should run away. Why? Well if the credit score is not important to the lender, in my experience, the terms and rates charged will be heavily weighted in the lenders favor. Even more than usual.

Lawyers that refer people to financing companies face some points to ponder as well. A number of state Bar associations have issued opinions that seem to be similar in nature to the New Hampshire Bar Association opinion:

An attorney contemplating involvement in such programs must be very cautious in advising his or her client to engage in such funding. Only through thoughtful and careful counseling and disclosure to the client can an attorney avoid the ethical pitfalls that exist.

Now on to peer-to-peer loans you asked about.

Peer-to-peer lending for those who are unaware are companies that act as intermediaries and loan managers to allow people like you and me to help fund loan requests to other people like you and me.

These lending groups claim their rates are lower than traditional lenders because they are not brick and mortar operators.

I happen to also help fund loans through this type of lender for my readers and I've been very impressed by the performance of the company in screening individuals, the prompt issuance of loans and the feedback I hear from consumers has been very positive.

The reality is while many think unsecured loans are not available from legitimate lenders, the peer-to-peer lending crowd does make almost all of their loans without requesting collateral or a co-signer. They also use traditional credit scoring and review policies and not everyone qualifies. However, I have seen them make loans down to 660 credit scores.

Most people just jump in and apply for a loan. That would be the least favorable approach.

The better thing to do is think of what you would do to sell your house fast. You'd at least look it over and pick it up so it's not a mess when potential buyers take a look.

The same is true when setting yourself up for getting approved for a peer-to-peer loan. I wrote a guide, "The Ultimate Debt Consolidation Loan Guide: Getting Approved, Acting Smart, and Being Wise" and the steps in that guide would apply to anyone looking to get any sort of unsecured financing, even for legal fees.

You can read the guide here.

As with any type of financing, make sure you read and understand the terms and conditions and make an informed decision if the financing offer is agreeable and affordable for you.

Before I go I wanted to leave you with three easy action items you jump on right now to address your situation. Just click here.

Get Out of Debt Guy - Twitter, G+, Facebook

If you have a credit or debt question you'd like to ask, just click here and ask away.

If you'd like to stay posted on all the latest get out of debt news and scam alerts, subscribe to my free newsletter.

I'd like to invite you to participate in the Get Out of Debt Guy Support Group. Everyone is welcome.