Lawsuit Loans and Pre-Settlement Funding in North Carolina.

North Carolina has banned pre-settlement legal funding.

As of July 1, 2026, pre-settlement legal funding (also called lawsuit loans) is effectively prohibited in North Carolina. A new state law — House Bill 315, the Prohibit Litigation Investments Act — bans funding companies from advancing money to plaintiffs in exchange for a share of a future settlement or verdict. Because that is the entire structure of non-recourse pre-settlement funding, injured North Carolinians can no longer get a cash advance on their case while it moves through the courts.

There is one clear winner here, and it is not the injured plaintiff. When plaintiffs can’t access cash while their cases drag on, they are far more likely to accept a lowball offer just to pay rent and medical bills. The party on the other side of that offer is almost always an insurance company. North Carolina just removed one of the few tools that let injured people wait for a fair number instead of a fast one.

What North Carolina’s HB 315 actually does.

House Bill 315 was signed into law by Governor Josh Stein in June 2026 after passing the North Carolina House unanimously and the Senate 45–1. It makes North Carolina the first state in the country to ban third-party litigation funding outright, rather than simply regulate or cap it.

The core of the law is one sentence: “It is unlawful for a person to engage in litigation investment in this State or to furnish litigation investment to a party or counsel of record in a civil proceeding in this State.”

In plain terms, here is what that means for an injured plaintiff:

Pre-settlement funding is prohibited. Advancing money to a plaintiff in return for a contingent stake in their settlement or judgment is now unlawful.
The ban took effect July 1, 2026, and applies to civil proceedings arising on or after that date.
Penalties are severe. The state Attorney General can pursue violators for civil penalties of up to $50,000 per violation.
The law creates its own lawsuit risk. A person injured by a violation can recover damages — and may elect statutory damages equal to triple the full potential funding amount the investor contemplated, plus court costs and attorney’s fees. That exposure alone is enough to push funders out of the state entirely.

Any violating contract is void. A funding agreement that breaks the law is unenforceable — the funder couldn’t collect on it even if the plaintiff wins. That, on top of the penalties, is why funders will simply leave the state rather than test the line.

What the law does not ban

The statute carves out a few things, and it’s important to be precise about them:

Attorney contingency fees remain legal (lawyers can still work for a percentage of the recovery under the N.C. Rules of Professional Conduct).
An insurer’s contractual duty to defend or indemnify a party is untouched.
Nonprofit and legal-aid funding is allowed.
Immediate family members may still help with certain costs.
A direct loan that is not contingent on the case outcome is still permitted — but that is an ordinary recourse loan you must repay no matter what happens to your case. It is the opposite of the non-recourse, win-or-pay-nothing advance that pre-settlement funding provides.

That last carve-out is the whole story for injured plaintiffs: the only “funding” still allowed is a conventional loan you’re on the hook for even if you lose. The risk-free, repay-only-if-you-win advance — the thing that actually protected people who couldn’t get a bank loan — is gone.

Why this is a win for insurances companies.

Supporters of the ban, led by the North Carolina Chamber of Commerce and national insurance groups, frame it as protecting the courts from outside investors and “legal system abuse.” That’s the argument. Here’s the effect on the ground.

Pre-settlement funding existed because injured people run out of money long before their cases resolve. A serious injury case can take one to two years — sometimes longer. During that time the plaintiff often can’t work, can’t pay medical bills, and watches the rent come due every month. The defendant’s insurer knows all of this. Time is leverage, and the insurer has all of it.

A modest non-recourse advance flipped that dynamic. It let a plaintiff cover the basics and tell a lowball offer “no.” Take that option away, and the pressure to settle cheap comes roaring back. The insurer pays less, the plaintiff recovers less, and the gap between them becomes the insurer’s profit. As supporters of litigation funding have put it, banning it doesn’t stop frivolous suits — it mostly stops funded plaintiffs from refusing coerced settlements.

That is the trade North Carolina just made. The “integrity of the civil justice system” reads very differently depending on whether you’re the one who can afford to wait.

North Carolina plaintiffs were already fighting uphill.

This ban lands on a state where injured people already face some of the harshest rules in the country.

North Carolina is one of only a handful of jurisdictions that still follows pure contributory negligence. If a jury finds the injured person even 1% at fault for the accident, they can recover nothing — not a reduced amount, but zero. In the other 40-plus states, that same plaintiff would simply have their award reduced. In North Carolina, a sliver of blame can erase the entire case.

Pair that with a three-year statute of limitations on most personal injury claims (N.C. Gen. Stat. § 1-52) and a fault-based insurance system, and North Carolina plaintiffs were already negotiating from a weaker position than plaintiffs almost anywhere else. Pre-settlement funding was one of the few things that helped level it. Now that’s gone too.

How funding helped injured North Carolinians — before the ban.

Until July 2026, a non-recourse advance gave injured plaintiffs breathing room while their cases moved slowly through the courts. People used it to:

Pay ongoing medical bills and stay in treatment instead of skipping care
Cover rent, mortgage, utilities, groceries, and car payments
Replace lost wages when an injury kept them from working
Avoid payday loans, maxed-out credit cards, and borrowing from family
Refuse a lowball settlement and wait for the real value of the case

Because the advance was non-recourse, if the plaintiff lost, they owed nothing. That risk sat with the funder, not the injured person — which is exactly why banks never offered these advances in the first place.

What North Carolina plaintiffs can do now.

We won’t pretend there’s a perfect replacement, but here are honest options:

Talk to your attorney first. If your case arose before July 1, 2026, the new ban is written to apply to proceedings arising on or after that date — your lawyer can tell you whether your specific situation is affected. This is a legal question, so get it from counsel.
Ask your attorney about cost and fee timing. Many contingency-fee firms advance case costs and can be flexible on certain expenses during litigation.
Family help is still allowed. The law specifically preserves immediate family members helping with some costs.
Be cautious about “loans” that get around the ban. A lender offering you money in North Carolina now can only do so as a recourse loan you must repay regardless of your case. Read every term and have your attorney review it before you sign anything.
If your case is in another state, we can still help. Baker Street Funding provides non-recourse pre-settlement funding in dozens of states, including neighboring Virginia, South Carolina, Georgia, and Tennessee.

How pre-settlement funding works (where it’s still available).

For plaintiffs in states that still allow it, here’s the process — fast, attorney-coordinated, and risk-free.

Apply in minutes
A plaintiff applies online and provides basic information, including their attorney’s contact.
Case review
Underwriting speaks with the attorney to understand the details of the lawsuit. Approvals typically come in 24–48 hours once the attorney provides the case file.
Funding agreement
The plaintiff and attorney sign a clear, non-recourse agreement.
Receive money
Funds are wired to the plaintiff’s bank account (or sent by check) — often within hours of signing.

See what an advance could cost on your case with our calculator, or read more about how a settlement loan works and whether pre-settlement funding is right for you.

North Carolina lawsuit funding: frequently asked questions.

Is pre-settlement funding legal in North Carolina?

No. As of July 1, 2026, House Bill 315 (the Prohibit Litigation Investments Act) makes it unlawful to provide pre-settlement legal funding — a non-recourse advance repaid only out of a future settlement or judgment — for civil proceedings arising on or after that date.

What is HB 315?

It’s a North Carolina law that bans third-party litigation investment, including consumer pre-settlement funding. It carries civil penalties of up to $50,000 per violation and lets injured parties sue violators for damages, including up to triple the contemplated funding amount plus attorney’s fees.

Does the ban apply to a lawsuit I already filed?

The law is written to apply to civil proceedings arising on or after July 1, 2026. Whether your specific case is affected depends on the facts and timing — ask your attorney, who can advise you directly.

Can a family member give me money during my case?

Yes. The law specifically preserves the ability of immediate family members to help with certain costs. It also still allows ordinary loans that are not contingent on your case outcome (meaning you must repay them regardless of whether you win).

Why did North Carolina ban lawsuit funding?

The measure was championed by the North Carolina Chamber of Commerce and backed by national insurance groups, who argue outside investment encourages litigation. Critics — including consumer and plaintiff advocates — argue it removes a key access-to-justice tool and increases the pressure on injured people to settle cheaply.

Where can I still get pre-settlement funding?

In the many states that still permit it. Baker Street Funding offers non-recourse funding across most states.

If your case is in one of them, you can apply here.

I live in North Carolina, but my case is in another state — does the ban apply?

The law targets litigation investment tied to a civil proceeding in North Carolina, so a lawsuit filed in another state’s courts generally falls outside it. There is some gray area, because the statute also bars “engaging in litigation investment in this State,” which could reach a transaction made with a North Carolina resident. If you live in NC and your case is elsewhere, have your attorney confirm before relying on funding — and if your case is in a state we serve, reach out and we’ll tell you whether we can help.

The bottom line: a clear win for insurance companies, at the expense of injured North Carolinians.

North Carolina’s HB 315 eliminates pre-settlement funding for injured plaintiffs in a state that was already one of the toughest in the nation for accident victims. What was once a financial lifeline — one that let families survive a long case and hold out for fair compensation — is now off the table.

The result is predictable. Financially squeezed plaintiffs will take less. Insurance companies will pay less. And the difference stays in the insurer’s pocket, dressed up as protecting the courts.

In states like California, New York, Florida, Texas, Georgia, and Virginia, funders still provide advances at competitive market rates because the law lets them price the actual risk of a case — and plaintiffs there can cover their bills and negotiate from a position of strength. North Carolina just took that option away from its own injured residents.

This page is for general information only and is not legal, tax, or financial advice. Laws change and individual situations differ — consult your own attorney about how North Carolina’s HB 315 applies to your case.

More ways we fund cases where funding is available.

Lawsuit loan buyouts — switch and save.
We can buy out a higher-rate advance from another funder and lower your cost.
Learn more
Need more than your first advance?
Additional funding on a lawsuit loan you already have.
Learn more
Monthly lawsuit loan payments for large cases.
Scheduled advances that pay out over time on bigger claims, typically worth $100K+.
Learn more
Medical & surgery lien funding for personal injury lawsuits.
Get treatment now, repaid from your settlement.
Learn more
Settled, but still waiting for your money?
Post-settlement funding bridges the gap while your settlement proceeds are being processed.
Learn more
Preferred pricing starts with a direct attorney referral.
When the referral comes straight from your firm, your client may receive better terms.
Learn more