Here is why you can't get legal funding in North Carolina
Since we get a ton of calls about funding in North Carolina, we wanted to take the time to explain why it’s so hard to get funding in NC. Read below and please let us know if you have any questions about our policies.
Keep Getting Rejected for Legal Funding Because you Live in NC?
You probably got to this page because you need a lawsuit loan, you live in North Carolina, and every funding company you call gives you the same answer – “sorry we don’t fund NC.” You are probably wondering why – and there is a very easy answer to that question, but it might not be what you think…
Legal funding for plaintiffs in North Carolina is in fact, legal. HM Capital and other funders can provide you with funds against your lawsuit – as of the writing of this article there are no specific laws in the state that call out legal funding in particular.
Here is why funding companies won't fund you in NC
Legal funding is risky business, and funding firms want to make sure their risks are covered. This is why the rates are usually way above mortgage rates or even hard money loans. Some companies charge upwards of 80-100% interest a year. HM Capital’s rate is way lower, sometimes less than 70% less than our competition. In NC – it is not possible to charge those rates because the legislature caps the rate on these type of advances to consumers.
Per North Carolina Law – funding companies cannot charge more than 16% rate a year on legal funding. While it may sound high for a loan, funding companies won’t be able to make enough money to provide plaintiffs of personal injury cases with pre-settlement advances with that rate.
Most funding companies have a default rate of around 20-35% – meaning more than a third of all fundings are losses. This is why the rates are so high – because cases are unpredictable. And don’t forget – once you get funding and you lose your case – you still get to keep you cash. There is no recourse in legal funding after all – so it’s a bad deal for most funding companies.
How can you get a lawsuit loan in NC?
Most companies won’t be able to help you for reason mentioned above – it does not make financial sense to funding companies to fund in NC. Still want to get funding? Here are a few options:
- If the requested funding amount is more than $25,000 – there is more legal flexibility with larger requests, and we can assist one those larger cases as well. You can apply here for a North Carolina pre settlement advance for over $25,000.
- Show us that you don’t live in North Carolina – if you can show the company that you in fact, don’t live in North Carolina, and you have an ID and mailing address in another state – you can probably get funded (although there are other states that restrict funding, too). This can only work if you don’t actually live in North Carolina.
Is the rule against legal funding in NC good for consumers?
Like more laws – there are political motivations and public policy decisions that drive new laws into place. The lawmakers in NC believe the residents of that state are better off without legal funding.
The truth is more complicated, like it always is. If you are facing eviction, have bad credit, and can’t buy food – what good will a $200,000 settlement will do for you in 2 years? What is the alternative for a struggling client? The bank will never give you money with bad credit. North Carolina law does not allow lawyers to lend money to the client, and plaintiffs are very limited in the way in which they can get funding.
Do some legal funding companies charge too much? Of course they do. However, the question should be – are consumers better off without any legal funding whatsoever when there are not any decent credit alternative out there.