On May 26th, 2010 Judge Norma Ruiz denied a request for court approval to transfer future structured settlement payment rights to Settlement Funding of New York, LLC (Peachtree Financial). The opinion, seen here, is a direct response to the “cash now” advertising of this company. It’s good to see a judge take the time to enforce the Structured Settlement Protection Act as noted by this author.
In this video, Andrew Cravenho, President of the Settlement Quotes, LLC Structured Settlement Factoring Exchange is interviewed by John Darer of the Legal Broadcast Network. Viewers can learn how a Structured Settlement Factoring Exchange is a viable option to use when selling structured settlement payment rights.
What is the servicing of structured settlement payments?
The servicing of structured settlement payments occurs when an annuitant enters into a structured settlement factoring agreement in which the annuitant chooses to split one or more payments and the factoring company becomes the payee of the entire payment. Once the factoring company receives the entire payment from the insurance company, they keep their agreed upon amount and pay the annuitant their portion.
Settlement Quotes has received several inquiries regarding structured settlement factoring companies delaying their obligation to pay annuitants.
Here are a few of the blog comments that Settlement Quotes has received in the past few months:
The following two questions were asked by John Darer of Structured Settlements 4 Real:
The answer to this is quite simple. An annuitant cannot forgo the court approval process in a structured settlement factoring transaction. Here is why:
Many annuity policies and settlement agreements usually include anti-assignment or anti-sale language. Even though this language is included within your settlement documents, you are still able to sell your future structured settlement payments!
Here is an example of the language that may be contained inside your annuity policy or settlement agreement:
John Darer of Structured Settlements 4 Real published a disturbing article yesterday afternoon about an individual interested in selling the rights to a structured settlement with the following details:
Structured settlement factoring is designed to provide liquidity in case of a financial emergency and in most cases should not be used to start an investment fund. Not only are structured settlements tax free, but they are also guaranteed payments from well rated insurance companies.
There are many reasons to sell a structured settlement including:
It is important to take into account the welfare and well being of any dependents that may be affected by the overall outcome of a factoring transaction. Cashing out a structured settlement eliminates the tax-free guaranteed payment stream that you and your family may receive on a monthly, annual, or semi-annual basis.
Settlement Quotes would like to correct a myth about the pricing of structured settlement factoring transactions that we may in fact have created. Settlement Quotes prides itself on our low discount rates that we supply to our clients who are selling the rights to their structured settlement payments. In the past we have discussed rates in the range of 8-10%, but can these rates translate to every factoring transaction that comes through the door? The answer is no.
Guaranteed payments are payments that will be made for a guaranteed period of time to either the annuitant or to a beneficiary. Non-guaranteed payments or life contingent payments are payed out for a period of time that is dependent upon the annuitants vital status. In other words if the annuitant dies, so do the payments.
How does this effect a structured settlement factoring transaction?
Structured settlement factoring transactions are priced using many variables to determine the overall risk involved in the transaction (i.e. Insurance company rating–A- AAA, length of payment stream, and guaranteed vs. non-guaranteed payments). If a structured settlement factoring company purchases a life contingent payment stream and the annuitant dies a year later, the factoring company will never receive any money.
Life contingent payment streams are not impossible to accomplish, but are more expensive. Depending upon the annuitants age, health, driving record, medications, and other information a life insurance policy can be purchased with the factoring company as the beneficiary. The purpose of the life insurance policy is to ensure the factoring company that they will either receive all the life contingent payments that were originally purchased, or upon death of the annuitant, the factoring company will receive a payout from the life insurance policy.
Not only are non-guaranteed payments more expensive to sell, but the transactions take much longer to fund as well. If you would like more information on non-guaranteed payments vs. guaranteed payments please comment.