Cash for Structured Settlements Transfers: The Tough Facts
Posted on August 28, 2009
Filed Under Taxes | 1 Comment
Structured settlement companies, or factoring companies, trade lump sums of cash to people who have structured settlements from a successful lawsuit. If you want a large sum of money, and are willing to trade your future rights to more money, for cash now, then this might be an option for you.
There are some important matters that you should be aware of. If you do wish to get cash for structured settlement payments, realize that you will be transferring all of your future payment rights to the brokerage company.
There is a reason that you see the commercials for structured settlement payment transfers on television all of the time. They are making a lot of money in this business. Most of these companies do business ethically, but you must remember that its in their best interest to get you to relinquish your payment rights to them. So no matter how friendly they may sound on the phone or in person ” theyre not your friends. They want your money.
So unless youre in dire straits or you absolutely need the money or the house will be foreclosed ” or some other life shaking event ” in is in your best interest, financially, to take the slow drip payments.
Structured settlement companies profit, in part, by paying people like you a lump sum of cash that is less than the discounted face value of your annuity payments.
It is common knowledge that many of the structured settlement companies have abused their consumers. Because of this abuse from structured settlement companies, now guaranteed favorable tax treatment is now at your disposal, if you wish to transfer your structured settlement payments.
California law, Structured Settlement Transfer, SSTA, requires: (1) disclosures to sellers of structured settlement payment rights, (2) notice to Attorney General, and (3) a court approval.
The transfer of payment rights will require the brokerage company to file a petition in the county where the transferor lives. To grant the transfer of rights for approval, the court must determine:
(1) the transfer of structured settlement payment rights is in the best interest of the transferor;
(2) the transferor has been advised in writing to seek independent professional consultation and either has received that advice or decided to waive it;
(3) the transferor has received the disclosure form;
(4) the payment rights transfer does not interfere with any court orders;
(5) the seller understands the agreement, disclosure form; and
(6) the seller understands the right to cancel the sale and does not wish to do so.
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