6 Reasons Plaintiffs Get Denied for Pre-Settlement Funding

Access to Legal Funding is Based on the Merits of Your Legal Claim

Pre-settlement legal funding helps plaintiffs involved in pending personal injury cases meet expenses and medical bills while they wait for compensation. Unfortunately, while this sort of funding can be a valuable lifeline for injured plaintiffs, not all applicants qualify. It is always stressful if you are denied a funding request, and pre-settlement funding is no exception.

When you are shopping for financial products like auto loans, variables like employment status and credit score can cause your application to be denied. With pre-settlement cash advances, neither employment nor credit history is a factor. Instead, qualification depends only on the quality of your case.

Many personal injury cases leave plaintiffs with severe, long-term disabilities. Often, this complicates meeting household expenses while leading to increased medical expenses.

While litigation can ultimately get you the compensation you deserve, finances can become tight during the long pendency period common to most personal injury cases.

For many people, taking legal action is unfamiliar territory, and some are even discouraged from pursuing a personal injury claim due to their limited financial reach.

Lawsuit funding, also known as pre-settlement loans or non-recourse cash advances, is assessed solely on the merits of your case, including its strength and the likelihood of a successful settlement.

In most cases, you will be contacted with a contract for a cash advance typically within a few days, but there are some situations in which plaintiffs are outright denied funding. The reasons for denial can be specific or general, and we’ll outline the six most common reasons today.

You Have No Lawyer or There Are Issues with Your Lawyer

To qualify for lawsuit funding, you must be represented by a lawyer. Even if you have a strong case, your chances of successfully applying for pre-settlement funding will be minimal if you have not retained an attorney.

So, if you feel you can represent yourself in your personal injury claim, be prepared for this decision to impact your application for a lawsuit loan.

Beyond this, your application may be denied if your lawyer fails to submit all requested documentation pertaining to your case.

If your attorney neglects to sign the contract, your funding will likely be denied.

You Have Hit the Limit for Available Funding

Most applications for pre-settlement funding will ask if you have previously sought funding related to your case. Resist the temptation to conceal this information, as all funding companies will perform due diligence.

In some cases, funding companies will decide there is no room for further funding due to the value of your potential settlement or award and any previous lawsuit loans already in place.

Funding Is Not Available in Your State

State laws vary throughout the United States, with each state having different regulations applicable to pre-settlement funding companies.

Some litigation funding companies choose not to operate in certain states for regulatory reasons, so you could be out of luck depending on where you live.

Additionally, pre-settlement funding companies will verify that you are a resident of the state where you apply. If you reside in a state outside their base of operations, you may be denied funding.

States like Arkansas, Colorado, Maryland, and West Virginia have laws or legal precedents that make it difficult for plaintiffs to get the financial assistance they need. Regardless of the strength of your case, you will likely be denied funding if you live in one of these states.

However, cash advances for lawsuit assistance are legal in most states.

Your Financial Liabilities Don’t Meet Guidelines

As outlined above, your credit score is not a determining factor in establishing your eligibility for lawsuit funding. That said, funding companies will nevertheless review your financial liabilities to more accurately assess your application.

If you have child support liens or bankruptcies, for instance, your application for pre-settlement funding may be denied.

Fortunately, once you clear up and satisfy these obligations, you can reapply for pre-settlement funding.

Your Settlement Case Is Too New

You will need to ensure all documentation related to your case is in place and ready to provide to the funding company when requested. If crucial documentation is missing—police reports and medical documents, for example—pre-settlement funding firms may be reluctant to offer you a cash advance.

Additionally, if the accident is too recent, funding companies may lack the evidence needed to consider your case a worthwhile risk, leading to the denial of your lawsuit loan application.

Liability Issues

Sometimes, even if you feel your case is watertight, some funding companies will deny your application.

Lenders need to be certain that you were not at fault for the accident. Whenever liability is unclear, there is little chance of pre-settlement funding being approved.

Not all plaintiffs present funding companies with an accurate outline of events, so the companies will need to see all of the facts related to the case to arrive at a decision. Any inconsistencies are likely to result in the denial of your application.

[LEARN MORE]: Can you get a loan on a class action lawsuit?