Personal injury victims often use pre-settlement loans as a last resort when facing insurmountable financial pressure. Most need cash to cover medical bills, meet monthly expenses and feed their families. Financial pressures can be almost impossible to manage if the victim lost their job due to health issues from the accident and has no stable income.
Pre-settlement companies exist to support desperate plaintiffs, but they cannot fund every case that comes along. To avoid being turned down for a cash advance, it is important to understand the reasons legal funding companies reject plaintiffs’ applications.
What is Lawsuit Funding?
A legal loan, sometimes referred to as a cash advance, is money fronted to a plaintiff against their future settlement. You can use it to cover everyday expenses, pay attorney fees, fund post-injury treatment or for any other purpose.
Legal funding companies do not control the way their clients spend pre-settlement loans. No financial reports are needed. How you dispose of the money is completely up to you. And a big advantage is that lenders will not ask you to repay your loan if your attorney loses the case.
These conditions may seem favorable for plaintiffs and risky for pre-settlement funding firms. That is why legal funding companies are very selective when reviewing applications. They need a great deal of assurance that the case will pay off and not drain their budget. Prior to issuing a loan, they will contact the applicant’s attorney and thoroughly study all available documentation.
The following factors can cause confusion and lead to the dismissal of your request. Be sure to fix them if you can prior to applying for legal funding.
Pre-settlement funding is illegal in some US states, namely Colorado, Maryland, and Tennessee. Also, only 20 states allow cash advances for workers’ compensation lawsuits. Even if you apply for a loan in a location where lawsuit funding services are legal, the lenders will confirm that you actually reside there. If lawsuit funding is illegal in your state of residence, your application will be denied.
Lack of an Attorney
To save money, some plaintiffs try to handle their cases without professional support. Without an attorney, you have zero chance of qualifying for a pre-settlement loan. A legal funding company wants to know your case is in the hands of a competent specialist who will not lose the case in court.
A seasoned attorney is more likely to win a personal injury case in court than an inexperienced plaintiff. Unless you are yourself an attorney, you lack professional knowledge and it will be difficult to view the legal process objectively. Your words and actions are likely to be driven by emotions rather than facts, and your chances of persuading a judge are slim.
Having a competent legal representative increases the chances of your application being accepted, and your lawsuit being resolved in your favor. Investing in an experienced personal injury lawyer will surely pay-off.
Never apply for a cash advance without notifying your attorney. You should discuss this step with them and make sure they will provide case-related documentation at the request of a legal funding company.
Abuse of Cash Advances
The simple application process and low risk for plaintiffs make it tempting to request loans from multiple companies. If fact, you are not prohibited from doing so. This can be beneficial in the short term, since lower interest is often applied to small loans. But borrowing more money than you really need can cause problems in the long run.
We cannot give you exact figures, since the upper limit of your loan amount depends on the circumstances and worth of your case. But if you expect a settlement of $50,000 and you have already borrowed $55,000, your application is likely to be denied. If you borrowed only $25,000, there is still room for additional financing.
It is okay to approach multiple lenders, but don’t go overboard or you may find yourself with nothing left from your settlement award.
The risks taken on by legal funding companies explains why they are discriminating when it comes to advancing money. Investing in the wrong cases could cause them to go bankrupt. If your documentation is not convincing and the evidence is not compelling, it will be hard to find a lawsuit funding company willing to advance a loan.
Do not apply for legal funding prior to receiving an accident report, medical clearance, test results and other important documents. It will be a waste of time, and your application will be turned down.
Low Likelihood of Loan Repayment
You can have a strong case and a competent attorney, but a legal funding company may determine that once they deduct all your fees and expenses from your expected settlement, there will not be enough money left to repay the loan.
It makes sense to demand a high settlement from the defendant, but there is no guarantee that you will get that amount. Only borrow as much as you need to get by, to improve the chances of your loan being approved.
Cronus Capital Group: the Best Lawsuit Funding in NYC
Here at Cronus, our application is simple, and we promptly provide cash to qualifying personal injury victims. If the available evidence clearly shows that you are an innocent victim who is suffering through someone else’s fault, we will do our best to help you out of your stressful situation so you can hold out for the settlement you deserve.
Don’t feel pressured to accept lowball offers from the defendant’s insurance company. They will do everything they can to pay as little as possible. A personal injury loan takes the pressure off, so you can wait for your case to resolve in court.
Contact us by phone or via our online form to see if your case is eligible for pre-settlement funding. Be sure to provide your attorney’s contact data so we can reach out to them for details and documentation.