Balagizi joined League One side Wigan on a season-long loan on the back of an impressive spell with Crawley last term that saw him score three goals in 16 games.
But his time at the DW Stadium has been disappointing, with the 20-year-old playing just four times at senior level and failing to start once in the league.
Manager Shaun Maloney had left him out of his matchday squad entirely for all but one of the last 13 games in League One, which has coincided with a run of just one defeat in eight.
If Liverpool werent already considering terminating the deal in January, the likelihood has increased now, with Balagizi out for at least six weeks through injury.
James damaged his hamstring in training, very innocuous, but it doesnt look a very good one, Maloney told the Wigan Observer on Thursday.
Were probably looking at around six weeks for him, which isnt good news.
On the prospect of Balagizi returning to the AXA Training Centre for treatment, the Wigan manager added: Well allow him and Liverpool to decide what happens.
It comes after a similar issue for Balagizi this time last year, when the versatile youngster eventually underwent surgery for an injury that ended his time at Crawley mid-season.
There has been no confirmation yet whether Liverpool will recall Balagizi in January yet, but the belief is that it would be the best course of action for all parties.
Already out of Maloneys plans, he may find it even harder to break through after a lengthy layoff, and returning for the second half of the season with the U21s may be more beneficial.
Balagizis injury problems have denied him a chance in Jurgen Klopps first-team squad in the past, with an arm issue keeping him out of pre-season training in 2021.
He was named on the bench for the Carabao Cup clash with Norwich and FA Cup win over Shrewsbury that season, but has failed to make a senior debut yet.
The Manchester native may not be the only Liverpool loanee recalled, with decisions to make over Fabio Carvalho, Rhys Williams and James Norris, who are all lacking game time.