Will Taking Out a Non-Recourse Lawsuit Loan Affect My Eligibility for Government Benefits or Assistance Programs?

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pre-settlement funding and government benefits
Obtaining pre-settlement funding typically doesn’t affect your eligibility for government benefits like SSDI, SSI, Medicaid, or SNAP, as long as you spend the funds within the same month.

If you’re receiving government benefits like SSDI, SSI, Medicaid, or SNAP, you know how important these programs are for covering your essential needs. You might be dealing with a personal injury case and struggling to make ends meet while waiting for your settlement. You might also be contemplating a non-recourse lawsuit loan, also known as pre-settlement legal funding to keep afloat.

But how does this type of funding affect your eligibility for government benefits or assistance programs? Let’s dive into the details and clear up any confusion.

Key Takeaways

  • Non-recourse lawsuit loans provide financial relief during your personal injury case without requiring repayment if you lose.
  • Using legal funding within the same month can help keep your eligibility for benefits like SSDI, SSI, Medicaid, and SNAP.
  • Consult your attorney and stay informed about your benefit programs to avoid any issues.

Does a Non-Recourse Lawsuit Loan Affect My Government Benefits?

A non-recourse lawsuit loan is a cash advance specifically designed for plaintiffs in personal injury cases, even if you are receiving government benefits like SSDI, SSI, Medicaid, or SNAP. You only repay this loan if you win your case, and if you lose, you’re not responsible for repaying the loan. This advance can cover urgent expenses such as medical bills, rent, or daily living costs while you wait for your settlement.

Key Features

  • No Credit Checks. Your credit history isn’t a factor.
  • Immediate Funds. Funds can be disbursed quickly, often within the same day.
  • Qualification
  • Repayment. You only repay if you win your case, with the repayment coming from the settlement amount​​.


  • Case Merit. Approval depends on the strength and potential value of your legal case.
  • Attorney Participation. Your attorney must cooperate and provide the required case documents.
  • Legal Representation. You must be represented by an attorney to qualify for pre-settlement funding.

Protecting Your Government Benefits

Since pre-settlement loans are typically not considered income, they usually don’t affect your eligibility for government assistance programs like Temporary Assistance for Needy Families (TANF), unemployment insurance, Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), Supplemental Nutrition Assistance Program (SNAP), and Medicaid. To keep your benefits, consider spending your loan within the month you get it so it’s not seen as an asset.

Other Tips for Managing Your Pre-Settlement Loan

  1. Prioritize Essentials. Use your loan funds for important expenses like medical bills, rent, and daily living costs.
  2. Keep Records. Keep detailed records of how you spent the money from your lawsuit.
  3. Consult Your Attorney. Talk to your attorney before taking out pre-settlement funding.
  4. Stay Informed. Regularly check the specific guidelines of your benefit programs and reach out to relevant agencies if you have concerns.

Which Government Benefits Are Affected by Lawsuit Loans?

Lawsuit loans, also known as pre-settlement funding, are usually considered advances on a future settlement, not income. However, the impact of these loans on government programs can vary. Here’s how legal funding might affect different benefits:

  1. Social Security Disability Insurance (SSDI). If you get SSDI, you don’t have to worry about lawsuit loans counting as income. Just use the loan money promptly to keep your benefits.
  2. Supplemental Security Income (SSI). For those on SSI, spend any lawsuit loan funds within the same month to maintain your eligibility.
  3. Medicaid. Receiving Medicaid? Make sure to use the money from your lawsuit in the current month to keep your coverage.
  4. Supplemental Nutrition Assistance Program (SNAP). If you get SNAP benefits, any leftover cash at the end of the month might be seen as an asset. Use the settlement advance before the month ends to stay eligible.
  5. Temporary Assistance for Needy Families (TANF). TANF recipients should spend the cash advance quickly so it doesn’t affect your benefits.
  6. Unemployment Insurance. Generally, pre-settlement loans don’t interfere with unemployment benefits.
  7. Earned Income Tax Credit (EITC).  Legal funding doesn’t affect this credit.
  8. Housing Assistance. For public housing and Section 8 vouchers, spend the cash advance during the month you receive housing assistance to avoid problems.
  9. Veterans Benefits. Disability compensation isn’t at risk, but manage your advanced money carefully to prevent issues with other benefits.
  10. Disaster Relief. Pre-settlement funding typically doesn’t affect disaster relief benefits.

The Takeaway

Balancing a personal injury case while relying on government benefits can be really tough. The good news is, a pre-settlement loan can give you the support you need. However, to keep your benefits secure, it’s important to manage these funds wisely, such as medical bills, rent, food, credit card bills, child support, transportation and day-to-day costs.

For financial relief that keeps your benefits safe, Baker Street Funding offers quick, hassle-free non-recourse loans. Our dedicated team is here to support you every step of the way, so that you can keep your mind on your recovery and not financial worries.


Can a lawsuit loan affect my Social Security benefits?

Generally, SSDI benefits aren’t affected by pre-settlement funding.

Is a lawsuit loan considered income?

Typically, no. Non-recourse loans are contingent on winning your case.

How should I report a lawsuit loan to government agencies?

While it is smart to report the receipt and usage of the loan to the relevant agencies promptly, it’s best to talk to your attorney for detailed advice.

Glossary of Terms

  • Non-Recourse Loan. A loan that is repaid only if the borrower wins a lawsuit.
  • Government Benefits. Financial assistance programs provided by the government to support those in need.

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.

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