Pre-Settlement Funding And State Laws

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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.     

States we fund.

Baker Street Funding only provides non-recourse pre-settlement funds in the following states: 

Need to apply for a pre-settlement advance?

Our application is easy, and you can get a decision in less than 24 hours. Apply easy and fast to qualify. 

At Baker Street Funding, we give you the inside scoop on pre-settlement funding by covering a variety of ... financing and legal topics to help you made the best financial decision for you and for your case. Our experts break down complex ideas in a way that's easy to understand so you can stay informed on current trends as well as tips and fact checked information by the CEO and founder, Daniel Digiaimo. Furthermore, Despite its name, consumer legal funding is not a loan. If you don't win your case, no payment needs to be made back. To avoid confusion and simplify matters on, we'll use the word "loan" throughout this article.

About Baker Street Funding

Baker Street Legal Funding helps plaintiffs and attorneys achieve financial ease during litigation through our non-recourse funding products. Our services give out thousands of clients fast access to tools and transparent information so you can get the needed funds with competitive rates. Baker Street Funding approval methods come with critical essentials for getting ahead fast, including larger approvals in connection to a thriving funding team of like-minded people. 

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* This post is for educational and informational purposes only. Please consult your attorney and your financial and tax advisors before making any decisions. Terms and conditions can be found at

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