By Jennifer Pritchett, Associate Editor

The convergence of two trends — seniors retiring while still in debt and continuing to drive until an advanced age — has created a financial pitfall for those who get into an accident and must wait for an insurance company settlement, says Toronto settlement loan provider Larry Herscu of Easy Legal Finance.

Herscu’s company is receiving a growing number of calls from older accident victims needing money to tide them over from the time of their accident to the day when they receive compensation.

“We’re getting a surprising number of seniors who are calling our business, and we’re getting a feel for a new form of experience — of people going into retirement and having more debt than they expected,” says Herscu, Easy Legal’s president and CEO.

“Once they have been involved in an accident, they’re coming to the realization that they’re in debt, and on top of that, they have to pay the added expense of rehabilitation and vehicle repairs. It’s a much more challenging situation than they expected.”

“The intent is to help bridge the gap between when the accident occurs and when the settlement is received,” he says.

In fact, Easy Legal has more demand for its services than it can actually fill, Herscu says.

“Seniors are driving much longer and, for many, it’s their main form of transportation. They need to fix their car so they can go to the doctor, and their rehabilitation will require much more time than someone younger,” he says.

It can take two years or longer for an insurance company to pay, particularly if there is a dispute over fault, Herscu notes.

He points to a survey last year by State Farm Canada that reported that one in 10 collisions involved a senior citizen. The survey also found that more than one-quarter of Canadians want to hold onto their driver’s licence past the age of 85. Herscu notes that Transport Canada reported in 2011 that drivers aged 65 and over represent 17 per cent of fatalities, although they only account for 14 per cent of licensed drivers.

Herscu has noticed a common theme among Easy Legal clients: “They’ve been hurt and they don’t have the financial means to take care of themselves. They’re on a fixed income and a traditional lender won’t give them any money.”

Easy Legal will lend up to 15 per cent of what it judges to be the value of an injured person’s settlement, he says. The loans work on a non-recourse basis, meaning that if the client does not win their settlement with the insurance company, they don’t pay back either the principal or interest.

“Our business is 100 per cent aligned to a successful outcome for the clients,” Herscu says. “It’s meant to get you by, not to get you further in debt.”

A recent survey by Sun Life Financial found that one-quarter of retired Canadians are in debt, the CBC reports. About 20 per cent still had mortgages, while 66 per cent were carrying credit-card debt. The average non-mortgage debt of retired Canadians was reported to be $11,204.

“It’s no longer Freedom 55, it’s more like Freedom 70 to 90,” Herscu says.

If a senior on a fixed income is involved in an accident and there are rehabilitation and vehicle repair costs, it’s expensive, he adds.

“If the insurance company hasn’t provided a payment because both sides are disputing who’s at fault, that becomes almost crippling,” Herscu says. “Those are the kinds of calls we’re getting into our call centre.”