Depending on where you live, you have different options for getting the money you need to take care of your needs while you wait for your case to settle. Here are some resources to help you understand which states we fund and why some states are exempt from receiving legal financing assistance.

How can usury laws affect your eligibility to get funding?

Usury laws protect consumers from paying higher rates when they borrow money from a financial institution that bases their loans on collateral. Traditional financial institutions deny loans when an applicant has a low score or is in high debt and does not see your post-settlement recovery as collateral. Banks base their loans on credit rating, income verification, among other requirements. Hence, their loans carry much lower interest rates because usury laws prohibit them from charging consumers very high rates.

Is pre-settlement funding offered in every state?

Pre-settlement funding companies have stopped funding in certain states due to the excessively high risks that come with the investment or because they prohibit legal funders from practicing there. In some of these states, non-recourse pre-settlement funding is considered to be loans, and usury laws have been implemented against the legal financing industry. These laws demand that non-recourse litigation financing firms charge similar rates to asset-based bank loans or recourse-based lenders. Recourse lending is a secured debt, which means that you guarantee you will pay back the loan backed by your credit score, income, and more.

Asset-based lending is also a secured debt, and it means that you are guaranteeing to pay back the loan backed on an asset like a house or a car. Either way, they get paid, or they’ll make your life miserable.

How do state restrictions affect victims involved in lawsuits?

Most plaintiffs who apply for loans against their lawsuits are under substantial financial pressure, in high debt, have no assets, and are unemployed. With this said, the third-party consumer litigation funding company cannot pursue legal action against you if you default on the payment if your settlement is not won; in that case, you will be officially free from any debt with us. Therefore, the loss of investments would be tremendous. This is why pre-settlement funding companies charge higher rates than traditional loan institutions to cover up for the loss of non-recourse capital provided to claimants that do not win their legal battles. These are the states where pre-settlement funding financial assistance has been prevented from plaintiffs looking to fund their litigation: Arizona, Arkansas, Colorado, Kansas, Kentucky, Maryland, Nevada, New Mexico, Tennessee, Vermont, West Virginia.

Insurance companies.

Insurance companies are powerful, and because of that, they can delay paying out compensation in personal injury cases for years. They try to fight every claim so that they can pay the lowest amount possible for your injuries. Most states of the United States understand the concept of usury laws, which do not apply to pre-settlement funding because, unlike banks, the advance is based only on the victory of the case and not collateral. These states’ consumer protection laws that block plaintiffs from receiving financial assistance by funding their litigation benefit the insurance companies. The reason why is because these implemented laws leave victims of medical malpractices, catastrophic injuries to deal with unexpected urgent financial situations from their lawsuits, such as evictions, car repossession, business shutdowns, and more, eventually pressuring them to settle their claims for outrageous low-ball offers from the insurance, while they profit from paying less for their pain.