Money can be tight if you’re filing a personal injury claim, especially if you’ve suffered a loss of income as a result of your damages. If you’re wondering how to pay the bills, you’re probably looking into obtaining legal funding. Can your lawyer deny you from getting a pre-settlement loan?
The simple answer is no – your lawyer can’t stop you from applying or obtaining a pre-settlement loan. However, they can try and steer you away from applying for pre-settlement legal funding and even refuse to accept it if you refuse to cooperate. Here’s what you can expect when applying for legal funding and how your lawyer can impact your ability to obtain it.
You Must Have a Lawyer to Apply for Legal Funding
When you apply for a pre-settlement loan with High Rise Financial, you must have a lawyer representing you. Legal funding companies need access to the specifics of your claim – both the legal documents and your medical records. Reputable legal funding companies only back cases where a plaintiff victory is likely, and the strongest cases are ones where a lawyer is involved.
The reason for this is because the IRS classifies legal funding as a form of nonrecourse debt. This means the company can only obtain repayment from your settlement, not from your personal assets. If your lawyer denies the legal funding company the information they need to approve you for a pre-settlement loan, they are effectively denying you the funding you need.
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Most Lawyers Cooperate with the Pre-Settlement Loan Process
The good news is, most personal injury lawyers understand the financial challenges their clients are dealing with. They know that these cases can take months, if not years to settle.
While your lawyer may be able to advance funds to cover costs that are directly associated with your case, such as legal fees and expert witness testimony, ethical rules bar them from loaning you money for your personal expenses. Personal injury lawyers are familiar with pre-settlement loan companies and know that the legal funding they offer can be a lifeline to clients.
Legal funding can give your legal counsel the time they need to negotiate the strongest settlement. For that reason, your lawyer will likely cooperate with the application process – but if they don’t, you could always find a new one.
How Does a Legal Funding Company Determine Your Pre-Settlement Loan Eligibility?
In general, there are only two basic requirements you must meet to obtain legal funding: you must have a settlement claim and an attorney to represent you. Beyond that, the legal funding company will look at the specifics of your case to find out who is at fault.
In states with no-fault accident laws, it may be difficult to obtain funding if there is any suspicion that you could be found at least partially responsible for your damages.
Unlike other forms of financing, such as a personal loan, pre-settlement loans don’t require a credit check. You also don’t need to put up personal assets for collateral. All that matters for your ability to qualify for legal funding is your settlement and your likelihood of winning.
What if You Get Denied for a Pre-Settlement Loan?
If you’re denied a pre-settlement loan, you may be able to re-apply at a later date. It’s possible that your case has not progressed to a point where a company feels safe in taking it on. It’s common for a legal funding company to want a court to establish fault before they disburse legal funding in order to reduce their risk exposure.
You can seek out legal funding at any point in your case if you’re rejected. If the company you want to work with doesn’t want to work with you, you can always choose another. There are dozens of legal funding companies from which you can choose, and with some careful research, you can find the right one to partner with.
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How the Pre-Settlement Loan Process Works
We advise potential applicants to discuss getting a pre-settlement loan with their lawyer before applying. This helps ensure you are both on the same page and will expedite the process.
When you fill out the application form, we ask for some basic information including your name and contact information, and the name and contact information of your lawyer. We also ask what state you live in. Since your pre-settlement loan is tied to your settlement amount rather than to your credit rating, we don’t ask for any financial information.
Once we have your application, a team member contacts your lawyer to get all of the relevant documents that support your case. By applying, you give your lawyer permission to release this information to us. We keep it in the highest confidence.
Based on the strength of your case and the severity of your injuries, our underwriting team will determine if we can approve you for a pre-settlement loan. If we can, they will then give us a dollar figure. Our clients receive anywhere from $500-$250,000 in pre-settlement legal funding.
Your Pre-Settlement Loan Amount
Your pre-settlement loan amount will depend on your predicted settlement amount. The larger the predicted settlement, the more you can usually borrow. However, a responsible legal funding company will only lend you up to 20% or so of your settlement, since more than this entails higher risks to the company and higher fees for you.
Your legal funding can pay many of the costs relating to your claim, including medical bills and living expenses. The money is yours to spend however you need to. And rest assured, if your case drags on, or you face unexpected expenses, you can apply for additional legal funding, or even a settlement buyout if you’ve already hit your funding limit.
How You Pay Back Your Legal Funding
While legal funding is also called a pre-settlement loan, it’s different from most loans. You won’t have any monthly payments and, in the case of reputable funding companies, will only face simple interest. Your lawyer will pay your funding back only if you win your case – if you lose, you owe nothing.
This is another part of why your lawyer needs to be involved in the process. When you get a settlement or court award, the money goes to your lawyer first, rather than you. They then disburse funds as required to pay for any other expenses, including the following:
- Paying off your pre-settlement loan (loan amount + our one-time flat rate fee)
- Paying off any medical liens or medical lien funding
- Deducting their legal fees
- Paying back taxes
Once all of the stakeholders in your settlement are paid, the rest of the funds go to you.
If You Lose Your Case
Most plaintiffs who receive legal funding go on to win their cases. But in the event your case goes to trial and the jury votes against you, or a judge dismisses your case, you won’t pay any of your funding back. Like your lawyer, legal funding companies get paid contingent on you winning your case.
The only exception to this would be if you committed fraud in your personal injury case.
Apply for a Pre-Settlement Loan Today
At High Rise Financial, we make applying for a pre-settlement loan fast and easy. Once you’re approved, we can deposit the funds into your account within 24-48 hours. We offer up to $1million for each settlement, giving you a substantial source of funds to draw from over the course of your legal fight.
If this sounds right for you, fill out the form on the Apply Now page to get started. We serve customers across the United States and cover a wide variety of personal injury and employment cases. If you’re waiting on a settlement of any kind, it’s likely that you qualify with us, and we’re eager to help you in your case.