Can I get a cash advance on my lawsuit in North Carolina, and what does North Carolina law say?

By Michael Shemtoub, trial attorney, Beverly Law. Updated November 2026.

Odell v. Legal Bucks: the facts

Nancy Odell was hurt in a car collision in June 2001 and hired a lawyer. She expected to recover at least $30,000 but was having money trouble. On March 28, 2003, she signed a “Transfer and Conveyance of Proceeds and Security Agreement” with a litigation funding business and received $3,000 (Odell, 192 N.C. App. 298).

The payoff was $4,200 if paid before July 1, 2003. After that it grew by $234 a month, which is 7.8 percent of the advance, up to a cap of 325 percent of the advance, or $9,750. If she recovered nothing, the contract said the company “shall receive NOTHING.” If she breached or ended the deal, a clause set damages at three times the company’s security interest.

Her case settled in May 2005 for $18,000. At that point she owed $9,582, and the balance hit the $9,750 cap on June 1, 2005. That month she sued, claiming usury, champerty and maintenance, illegal gaming, a Consumer Finance Act violation and unfair and deceptive trade practices. The company counterclaimed for breach of contract and asked for $29,250. The trial court dismissed the gaming claim, granted the defendants summary judgment on the rest and awarded the company the $29,250.

What the Court of Appeals decided

The Court of Appeals reversed most of that ruling.

• An “advance” is covered. G.S. 24-1.1 applies to the parties to “a loan, purchase money loan, advance, commitment for a loan, or forbearance.” The company argued an advance must carry an unconditional duty to repay. The court disagreed: an advance is made “in expectation of reimbursement,” and reading the word the company’s way would make it meaningless.
• Usurious. The court found each element of usury, including an understanding that the money “shall be or may be returned” and interest above the legal maximum. The contingency did not defeat that understanding.
• Consumer Finance Act. The company was not licensed and contracted for more than Chapter 24 allows, which violated G.S. 53-166(a).
• Unfair and deceptive practices. A usury violation is not automatically an unfair trade practice under G.S. 75-1.1, but the company did not disclose that its contract was unlawful, so it “had the capacity to deceive.” The court held the violation established as a matter of law.
• The $29,250 award was reversed because the agreement was invalid and unenforceable.

The court affirmed on two points. The deal was not illegal gaming, because both sides wanted Odell to win. And it was not champerty or maintenance: assigning only the proceeds of a claim is not champertous, and the contract gave the company “[n]o control, input, influence, right or involvement of any kind” in her case.

North Carolina’s usury and consumer finance rules

• Rate limit. For a loan or advance of $25,000 or less, G.S. 24-1.1 allows the parties to agree in writing to a rate tied to the latest six-month Treasury bill rate plus six points, “or sixteen percent (16%), whichever is greater.”
• License. Under G.S. 53-166(a), lending $25,000 or less at charges above Chapter 24 requires “a license from the Commissioner” of Banks.
• Void loans. G.S. 53-166(d) says a loan made, serviced or collected in violation of the Consumer Finance Act is void, and the party in violation “shall not collect, receive, or retain any principal or charges whatsoever,” apart from bona fide computation errors.

For how other states treat the loan question, see is a lawsuit cash advance a loan.

The 2026 law: S.L. 2026-14

House Bill 315, the “Prohibit Litigation Investments Act,” was ratified June 11, 2026 and approved June 22, 2026 (S.L. 2026-14). It adds G.S. 66-511 to 66-515.

• What it bans. “Litigation investment” means providing money “for the fees, costs, and expenses of or related to a pending or potential civil proceeding” in exchange for repayment “contingent in any respect on the outcome.” G.S. 66-513 makes it unlawful to engage in or furnish litigation investment in North Carolina.
• What it excludes. G.S. 66-512(3)(g) leaves out money “for personal and household expenses during the pendency of a civil proceeding so long as the money or financial support is not used for the fees, costs, and expenses of the civil proceeding.” Lawyers advancing costs under the ethics rules and non-contingent loans are also excluded.
• Penalties. A contract that violates the article “is void.” The Attorney General may seek a civil penalty of up to $50,000 per violation, and an injured person may elect treble damages.
• Timing. The article applies to civil proceedings commenced on or after the act became law and to contracts entered into, renewed or amended on or after that date.

So a living-expense advance to an injured person is not banned by the 2026 law, and the law does not regulate it either. Odell still governs whether its pricing is usurious. If a contract lets advance money be used for case costs, it may fall under the new ban.

Can a North Carolina lawyer lend you money?

Not for living expenses. North Carolina Rule 1.8(e) allows a lawyer to advance court costs and litigation expenses, repayable from the outcome, and to pay them for an indigent client. Comment [10] says lawyers may not subsidize lawsuits, which includes making loans to clients for living expenses or backing such loans (N.C. Rule 1.8). Our page on whether your lawyer can give you money covers the general rule.

Your filing deadline in North Carolina

G.S. 1-52 begins “Within three years an action,” and clause (16) applies that period to personal injury, measured from when the harm becomes apparent or should have, with an outer limit of ten years from the defendant’s last act. Other deadlines apply to some claims. An advance does not pause the clock.

What to ask before you sign

• What is the payoff each month, and what annual rate does that equal? Compare it with the G.S. 24-1.1 limit.
• Does the company hold a North Carolina Consumer Finance Act license?
• Does the contract restrict the money to personal and household expenses, or could it be used for case costs?
• Is there a damages clause if you cancel or breach? Odell’s contract had one worth three times the security interest. See contract red flags.
• What will you net from the case after the payoff? How much of a $25,000 settlement do I keep shows the other deductions.

Common questions

Related pages

Cash advance on a lawsuit · Laws by state · Injury law FAQs

Important: This page is general information, not legal or medical advice, and reading it does not create an attorney-client relationship. Every case is different; talk to a lawyer about yours. Texas cases are handled by the firm’s Texas-licensed attorneys, Joyce Ondich and John Efstathiou. Last reviewed: November 7, 2026.