North Carolina consumers who take cash advances against a lawsuit settlement or judgment could get clearer rules under HB 925. The bill would set limits on fees, cancellations and repayment terms, and bar companies from steering cases or paying referral fees.
The money would be limited to personal needs or household expenses, so it is meant to help someone bridge the gap while a case is still unresolved, not to bankroll the lawsuit itself.
The line between help and case costs
The bill draws its hardest line around litigation costs. Funds could not be used for attorneys’ fees, legal filings, legal marketing, document preparation or drafting, appeals, expert testimony or other case expenses.
It also says charges can include amounts described as interest or a rate. That matters because the cost of these advances can be hidden in the language used to describe them, even when the product is not a traditional loan.
Who holds the keys
The Commissioner of Insurance would oversee the new article, and the bill defines a consumer as an individual living in North Carolina. It also defines a consumer legal funding company broadly as any person that enters into one of these transactions, whether or not the company is registered under the article.
In plain terms, the measure is aimed at the market around these advances, not at banning them outright. It tries to make the terms clearer for people who may be turning to that money because a lawsuit has left them waiting on relief they cannot afford to wait for.
Sources
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