Pre-settlement legal funding helps plaintiffs involved in pending personal injury cases to 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 any financial 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 are 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 at the same time leading to increased medical expenses.
While litigation can ultimately get you the compensation you deserve, things can become tight financially during the long pendency period common to most personal injury cases.
For many people, taking legal action is not familiar territory, and some people are even discouraged from pursuing a personal injury claim due to their limited financial reach.
Funding for lawsuit loans, 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 within a few days, but there are some situations in which plaintiffs are outright denied funding. The reasons for denial of funding can be specific or general, and we’ll outline the 6 most common of these reasons for denied funding 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 any application for a lawsuit loan.
Beyond this, your application may be denied if your lawyer fails to submit all of the requested documentation pertaining to your case.
If your attorney neglects to sign the contract, your funding is liable to 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 previous lawsuit loans already in place.
Funding is Not Available in Your State
State law varies throughout the United States, with different states 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 in some states.
Also, pre-settlement funding companies will check to establish that you are a resident of the state in which you apply for pre-settlement funding. If you reside in a state outside their base of operations, you will again be denied funding.
States like Arkansas, Colorado, Maryland, and West Virginia all have laws or precedent legal decisions that make it tough for plaintiffs to get the financial assistance they need. Regardless of the strength of your case, you will be denied funding if you live in one of these states.
Cash advances for assistance in lawsuits are legal in most states, though.
Your Financial Liabilities Don’t Meet Guidelines
As outlined above, your credit score is not a determining factor when it comes to establishing your eligibility for lawsuit funding. That said, funding companies will nevertheless review your financial liabilities. This will help them 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, as soon as you clear up and satisfy these elements, you can reapply for pre-settlement funding.
Your Settlement Case is Too New
You will need to ensure all the documentation related to your case is in place and ready to be provided 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.
Also, if the accident is too recent, funding companies may lack the evidence they need to consider your case a worthwhile risk, leading to the denial of your application for a lawsuit loan.
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 they will need to see all of the facts related to the case to arrive at a decision. In the event of any inconsistencies, this is likely to result in the denial of your application.
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