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

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

The Ivaliotis decision (2024)

The plaintiff was hurt in an August 2015 car crash. While her claims were pending she signed three funding agreements: $1,200 in 2016, $2,900 in 2018 and $5,500 in 2019, a total of $9,600. The opinion describes “annual accrual” rates of 33 percent (8.25 percent compounded every three months), 24 percent (6 percent compounded every three months) and 32 percent (16 percent compounded every six months), each capped at 42 months. Repayment depended on her recovery (No. A-1744-22, Oct. 11, 2024).

She settled her injury claim for $15,000 and later an underinsured motorist claim for $45,000. She paid the company $7,043.92 on the first two agreements, of which $2,943.92 was interest and fees. She paid nothing from the second settlement, and after her bankruptcy discharge the company disclaimed any effort to collect the $5,500 third advance. She then sued, calling them unlicensed, usurious loans.

The trial court dismissed the licensing and usury counts, “reasoning that CBC is not a lender and the contracts were not usurious,” and later granted summary judgment on the rest. The Appellate Division affirmed:

• It held the agreements “were not ‘loans’ subject to consumer licensing and usury laws,” relying on a federal decision, Dopp v. Yari, 927 F. Supp. 814 (D.N.J. 1996).
• It said she was “judicially estopped from having it both ways,” because her bankruptcy filing had described the agreements as something other than loans.
• Her Consumer Fraud Act claim failed for lack of an “ascertainable loss.” The court measured loss on the day she filed suit, and on that day “plaintiff did not owe defendants any money.”

The decision has limits. It is marked “not for publication,” so under New Jersey Court Rule 1:36-3 it does not bind other courts, and its facts were narrow: small advances, a bankruptcy, and a plaintiff who came out ahead in dollars. Courts in other states have split on the loan question; see is a lawsuit cash advance a loan. If you are thinking about bankruptcy, the way you describe an advance in your filing can matter later, as it did here (lawsuit funding and bankruptcy).

New Jersey’s usury and consumer lender laws

These statutes still govern any transaction a court finds to be a loan.

• Civil usury. Without a written rate, no one may take more than $6 per $100 a year. With a written contract the limit is $16 per $100 a year, or 16 percent. Loans of $50,000 or more may carry any agreed rate, except loans secured by a first lien on real property with one to six dwelling units (N.J.S.A. 31:1-1).
• Criminal usury. A loan to an individual at more than 30 percent a year is not “authorized or permitted by law.” Corporations and LLCs may agree to up to 50 percent (N.J.S.A. 2C:21-19).
• Licensing. The Consumer Finance Licensing Act covers loans of $50,000 or less “used primarily for personal, family or household purposes” at more than the rate an unlicensed lender could charge (N.J.S.A. 17:11C-2). No one may act as a consumer lender “without first obtaining a license” (17:11C-3). A licensee may charge an agreed annual percentage rate (17:11C-32), but most other charges are barred, and a lender that knowingly and willfully violates the Act forfeits three times the excess collected (17:11C-33).

Champerty and assigning part of your recovery

Champerty is the old rule against a stranger paying for a lawsuit in exchange for a cut of the result. We found no New Jersey appellate decision voiding a consumer advance as champerty, and the Ivaliotis opinion does not use the word. It did rule on the related point: “an assignment of proceeds arising from a civil judgment or settlement is permissible,” citing N.J.S.A. 2A:25-1, Ladenheim v. Klein, 330 N.J. Super. 219 (App. Div. 2000), and Cronin v. McKim-Gray, 353 N.J. Super. 127 (App. Div. 2002). The court stressed that the company “was not assigned control of those lawsuits or claims.”

The opinion also cites Advisory Committee on Professional Ethics Opinion 691 (2001) for the view that a lawyer may ethically refer a client to a company that advances money against a personal injury recovery. We were not able to open that opinion on the court’s site, so we rely only on how the Appellate Division describes it.

Federal court in New Jersey: Local Civil Rule 7.1.1

If your case is in the U.S. District Court for the District of New Jersey, a disclosure rule applies. Local Civil Rule 7.1.1 took effect June 21, 2021. Within 30 days of filing an initial pleading or a transfer to the district, each party must file a statement about any non-party that funds “attorneys’ fees and expenses” on a non-recourse basis in exchange for a contingent financial interest. Personal or bank loans and insurance are excluded. The statement names the funder, says whether its approval is needed for litigation or settlement decisions, and briefly describes its interest. Further discovery of the agreement requires good cause (Order adopting L. Civ. R. 7.1.1.pdf)).

A July 29, 2021 notice clarified that the rule “requires the filing of a statement only where third-party litigation funding exists” (Notice to the Bar). Because the rule speaks of funding fees and expenses, an advance used only for rent may fall outside its words. Tell your lawyer about any advance so the lawyer can decide.

Your filing deadline in New Jersey

Most personal injury actions must be filed “within two years next after the cause of any such action shall have accrued.” A minor’s medical malpractice claim for injuries at birth may be filed until the child’s 13th birthday (N.J.S.A. 2A:14-2). An advance does not pause these clocks.

What to ask before you sign

• Does the contract say what New Jersey law it relies on? After Ivaliotis, a company may argue that usury and licensing laws do not reach it.
• What do you owe at 12, 24 and 36 months, and how is the rate compounded?
• Will your lawyer have to file a disclosure under Local Civil Rule 7.1.1 if the case is in federal court?
• If you might file for bankruptcy, how should the advance be listed?

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.