Don't Be a Victim
SELLING A STRUCTURED SETTLEMENT?
Stop, Breathe, Think and Get Independent Professional Advice. Always.
SELLING A STRUCTURED SETTLEMENT?
What You Need To Know
Before Selling A Structured Settlement in 2025
Keep a structured settlement for what it WILL do, not what it might do. The "will do" is the contractually guaranteed income inherent in a qualified funding asset issued by a regulated life insurance company licensed to do business in your state
- Think about it. Think about the life event that led to you receiving the structured settlement payments. Write it down.
- What does that mean to you? Write it down.
- How would you benefit by keeping the payment schedule? Write it down; and then
- Sleep on it. Read it the next day, or the day after that. You don't have to do anything today.
Would You Give Yourself a Demotion at Work? Selling monthly structured settlement income payments is like giving yourself a demotion at work.
Selling your structured settlement payments is a money loser. You'll always lose money.
Despite the best laid plans, life situations might change and what made sense when a structured settlement was created may become "derailed" by an unanticipated occurrence, or living beyond your means. While selling part of your structured settlement payments may not make sense for most people, some people choose to sell structured settlement payment rights for pennies on the dollar of cash now, to pay for a variety of expenses like urgent medical care, education or essential home repairs.
The National Association of Settlement Purchasers estimates that less than 20% of structured settlement recipients ever complete a Secondary Market transaction. For those that do sell, some are misled into selling (or repeat selling) with lies perpetrated by unlicensed and unregulated salespeople posing as "advisers" and suffer disastrous financial consequences that may be difficult or impossible to fix.
Before Selling, Consider the Impact of a Lump Sum on Any Asset Sensitive Government Benefits You May Be Receiving
- Medicaid
- Supplemental Security Income (SSI)
- Food Stamps
Adult Day Care
Mental Health & Mental Retardation Centers
Don't shoot first and ask questions later! Don't demote yourself out of your income.
Beware a structured settlement payment buyers' self-serving strategy
to get you to sell the closest payments first
Any number of payment rights can be purchased, in any combination and size. Unethical structured settlement payment buyers may try to get you to sell the closest payments for pennies on the dollar first, because you will get more for your sold dollar in future payments. However, for those who already have difficulty managing a budget, the strategy sets you on a rapid and expensive road to financial failure if you have inadequate means to support yourself. It is also self-serving for the unlicensed and structured settlement factoring company whose sales practices are unregulated. It is not financial planning; in some cases, it is brutal financial rape for which there is no Special Victims Unit.
Once a structured settlement transfer petition is filed with a court, your privacy suffers
If you like your privacy, then don't start the process to sell your structured settlement. Once a petition to transfer your structured settlement payments is submitted to Court for approval, as is required by law, court scrapers appear like cadaver flies. Prepare to be bombarded with mailings, texts or calls promising you the world, or from real sounding "structured settlement audits", " structured settlement registries" or fake "government departments." If not, you will be. Just be aware it's all "snowballs rolling downhill" from there after submitting that first petition. Buyers and their lead generators scrape court records by electronic and personal means.
WARNING! If you receive a letter or call, or you're a plaintiff lawyer whose client receives a letter or call from a structured settlement factoring company soliciting you to sell payments either (1) before your structured settlement annuity has been issued, (2) within months of it being issued, or (3) within a very short time after you have initiated a change of address or beneficiary, please contact us. The person may seem to know facts about your policy that should not be public information.
WARNING: If your child is underage, but soon to be 18, and you or your child receive a call from someone who says they are calling "from the Courts" and claims to want to help you fill out some forms since your child is close to reaching the age of majority, hang up. It's a ruse. The Courts are not going to make random calls to you help you fill out forms. The company is likely scraping basic information from Court records and seeking to obtain information such as your child's cell phone number, tax ID and other personal data.
Exercise caution if the settlement planner that originally placed your structured settlement
suddenly solicits you to sell
your large structured settlement for pennies on the dollar, to invest the proceeds with them or a company in which they have a financial interest
If the settlement planner who placed your structured settlement and earned tens of thousands or hundreds of thousands in commissions is suddenly soliciting you by mail or electronic means, to sell your structured settlement payments only a few years later, be worried. Be very worried. Avoid being on the wrong end of a "triple play" driven by greedy settlement planners who (1) earn big commissions placing you into a structured settlement , (2) share in huge profit spreads from the sale of your large structured settlement payment rights with a third party factoring company; only to (3) earn even more asset under management fees through a related or affiliated registered investment adviser. Be informed. Make them put it in writing. If they won't, perhaps you should rethink doing business with them.
The lawyer provided by the buyer of your structured settlement payments
doesn't represent you. It's a lie.
According to a legal complaint filed against a Florida factoring company in May 2020, Michael Luback, then of Structured Asset Services, emailed Rochester New York resident Kenneth Lape on December 5, 2014 and said "please reach out to Andrew Cummings 305-979-8420 when you have a minute. He is representing you at the hearing Monday..." It was a lie. Attorney Cummings represented Structured Asset Funding, LLC. [see Philip Lape v Structured Asset Funding, LLC New York State Supreme Court County of Monroe Index Number E2020003377]. The Lape case remains pending with ongoing outstanding discovery issues in December 2023, with then Judge Anne Marie Taddeo having denied Defendant's summary judgment motion in July 2021 and further, denied Defendant's motion to stay discovery pending their appeal in October 2021. reasoning that any further delay in conducting discovery will only serve to prejudice Plaintiff's ability to prosecute his case. With Judge Taddeo's retirement, Judge Elena S. Cariola is currently presiding.
You will not get all your cash today (or ever) if you sell your structured settlement payments
Getting a lump sum of cash for structured settlement is not like visiting an ATM. You can't just get all the cash today or ever. In accordance with Federal law and state structured settlement protection acts, it is necessary to apply for and obtain court approval of the sale of structured settlement payment rights. The transaction must be in your best interest and the best interest of any applicable dependents in the Court's discretion. A "structured settlement factoring transaction" is defined under the Internal Revenue Code, [see IRC 5891(c)(3)(A)] even though some structured settlement payment purchasing companies and lead generation websites have mischaracterized it as a "structured settlement transaction" and unfortunately contributed to some consumer confusion.
If a Representative of a Structured Settlement Buyer or Their Lawyer Tells You to
Lie About Your State or County of Residence, Run Now!
A number of unethical structured settlement factoring companies will prey upon your desperation for cash and/or lack of sophistication by suggesting that you can get it done easier in another state, or in your state, but not the county where you actually live. Don't fall for this sucker play even if you're desperate for cash. In such cases, you're being set up by the factoring company to commit fraud. Don't accept airline tickets, or gift cards to pay for travel expenses to another state. Don't sign short term leases in a state that you do not reside in, or open bank accounts at the instruction of a structured settlement factoring company or its lawyers. Popular interstate forum shopping scenarios have included New York to Florida, New York to certain counties in New Jersey and Pennsylvania, anywhere to Virginia, New York to Connecticut, to certain counties in Georgia or South Carolina. If you later want to contest the deal you can be sure that the structured settlement factoring companies will argue to a judge that you were complicit in the fraud. Who needs that?
Beware Financial Advisers Working In Tandem with a Structured Settlement Payment Buyers using Unrealistic And/or Deceptive Investment Projections on the Proceeds
This is where an unethical factoring company attempts to mask their pennies on the dollar value proposition, by working with a financial adviser who shows you "pretty looking" investment projections to to take your eye off the ball. The investment projections are probably not achievable without risk, a risk that you may not fully appreciate or be willing to tolerate. Instead of using a Monte Carlo analysis, the returns on examples we've seen projected were linear and fail to take into account income or capital gains taxes that might be due on investment returns if you invested post sale of structured settelment payment rights. Your structured settlement payments that the cash now predators are trying to raid are income tax free, if the payments represent damages on account of physical injury, physical sickness, wrongful death, wrongful imprisonment, or claims of workers compensation (per the relevant sections of the Internal Revenue Code)
Avoid Getting Hustled To Sell Life Contingent Payments
Because You Want To Leave Money to Survivors
Life contingent payments are those structured settlement payments that are only paid if you are living. When lifetime structured settlements are established they generally include a certain period or guarantee period, which denotes how long payments will be made whether or not you survive the payment schedule. If the structured settlement was established when you were a child, after 30 or 40 years you may have some runway left, but no more certain period.
Hustlers in the structured settlement secondary market may try to get you to part ways with your structured settlement for obscene discounts. Some may tag team with an investment adviser. Remember that you would be starting with pennies on the dollar and would have to make up what you lost by doing the ill advised sale before you start making any money. Some of the more unethical companies may even try to scare you with stories about possible insolvencies. If you're healthy, you can keep your stable tax free structured settlement payments and use part of what you receive each month to pay for life insurance you buy to cover the contingency of your death. This will probably be more advantageous than getting hustled by structured settlement cash now pushers. If you would like to know more about this strategy, please contact us at the number above.
Be Sure To Carefully Read and Fully Understand Any Affidavit of Payee You Are Asked to Sign
Look out for inconsistencies.
Make sure the stated reasons are accurate in every way and make sense. In one glaring example, in 2020, one Queens New York law firm representing a Pennsylvania structured settlement factoring company, submitted petitions for three separate individuals in three separate counties in New York that
had the same typo and the same improbable inconsistency in the reasons for selling
.
Astute Judges don't give an "A" for creative writing.
I. Our principles with respect to structured settlement factoring
4structures.com LLC is neither in the structured settlement factoring origination business, nor an intermediary and is not a competitor of structured settlement factoring companies, or tertiary market companies. However 4structures and its President have a keen interest in seeing that consumers are treated fairly and are provided with accurate information about structured settlements and that the secondary market and tertiary markets are adequately regulated. John Darer is widely recognized as the Structured Settlement Watchdog , a pro boni role he has served for more than 19 years. In his role of Structured Settlement Watchdog, John covers the good, the bad and the ugly. John Darer has written extensive commentary, providing information on issues that in his opinion are important, or should be important to structured settlement consumers.
What We May Do
(1) Should someone contact us with questions concerning a possible sale of structured settlement payment rights to address a liquidity need in 2023, we will do our best to understand their situation and examine alternative options. Please note that if the original case was resolved in Bronx County or Westchester County New York, and we participated in the placement of the structured annuity, having signed a Structure Broker's Affidavit, under local court rules designed to protect profoundly injured people, neither we (nor any other placing broker) could speak with you on the subject unless authorized to do so by the New York Supreme Court in Bronx County or Westchester County.
(2) Setting aside Bronx or Westchester venued cases (or any other jurisdiction with similar rules), if, in the end, a structured settlement factoring transaction is the only viable option for the selling structured annuitant (and sometimes it really is), at the selling structured settlement annuitant's request we may:
(a) Provide independent professional advice
(b) Refer them to several companies that we know, We reserve the right to charge a fee for this service, commensurate with the service provided. No fee will be charged to any annuitant where we placed the structured settlement annuity as the broker or co-broker. In other cases, if a fee is charged it will be fully disclosed. It is believed some structured settlement brokers and settlement planners conceal that they are paid referral fees, the amount of such fees and the impact of such fees on the amount of cash the seller receives or the amount of future payments that need to be sold to pay such fees.
What We Don't Do
(1) We DON'T solicit structured settlement annuitants to sell their structured settlement payment rights.
However, we encourage our own clients and others to call us if they are feeling financial pressure, so we can have a chat about the situation and help them safely explore alternatives. We would rather you speak to safely test and talk through assumptions, instead of giving confidential information to one of the countless lead generation web sites that are registered anonymously, and those behind them who operate in the shadows while disseminating wholly misleading information.
(2) We also DO NOT violate confidentiality or privacy provisions in settlement agreements on cases in which we have previously been invited to participate by sharing case documents with factoring, settlement purchasing or settlement transfer companies, including factoring brokers. Is there any legal exposure to the attorneys who refer structured settlement consultants or settlement planners (who end up doing so), or their clients?
(3) We DO NOT sell protected information to factoring companies, factoring brokers or list brokers, under any circumstances.
II. Other Considerations if you are thinking about
selling your structured settlement payments:
(1) Watching a lump sum erode is painful
Is it really in your "best interest" and that of your dependents to sell your rights to structured settlement payments for pennies on the dollar in 2025? The correct answer can be arrived at only AFTER careful thought and analysis. You need to know the answer because your sale must be approved by a judge and judicial approval is required to sell structured settlement payments. Both the Internet and so-called "unemployment TV" are full of captivating ads that are funny and memorable. But after the laughter is over, it's you and your family that have to live with your decision and there's no going back. Figuratively speaking, if you have lifetime structured settlement payments, is it worth it to "fire yourself" or "take a pay cut" from" a "job" that you can never be fired from? Watching a lump sum erode as it burns through your fingers is painful.
(2) Why are you in this financial predicament?
Have you experienced significant losses due to poor money management, unwise investments, or just bad luck? Don't be discouraged; it is a learning opportunity. You may already benefit from the discipline, consistent flow, and financial safeguards offered by structured settlement. However your circumstances may have shifted, or you might be facing an urgent medical situation not covered by insurance. Have all you exhusted all of your options?
(3) You May Be Forced Into into a Payment Servicing Agreement
The servicing of structured settlement payments occurs when a recipient of a structured settlement agrees to sell a portion of their payment rights to a factoring company, but not the entirety. For example a structured settlement payee may need to sell only part of a guaranteed lump sum payment due in 5 years, or part of 60 monthly payments over the next 6 years to raise cash they need.
Some insurers issuing structured settlement annuities do not allow for the division of payments. To enable the partial sale of payment rights, a payment servicing agreement is established. Consequently, the annuity issuer pays the full amount to a servicing company, not just the portion being sold. The servicing company then divides the payment, distributing the appropriate amounts to the respective parties. Factoring companies also engage servicing companies when they acquire a substantial number of structured settlement payments and aim to divide them into smaller streams to appeal to more investors in structured settelment receivables.
The SuttonPark Nightmare Payment Servicing Delays, Information Void and the Resulting Humanitarian Crisis
Unfortunately the information given to sellers and investors is minimal and what is given is pretty opaque. Ongoing issues related to serviced payments from SuttonPark, the largest aggregator and servicer of structured settlement receivables from June 2024 for 7 months (and not fully resolved), highlights that payment servicing results in minor delays in payment dates at best for unsold payments, to payees losing their minds following the lay off of the majority of the SuttonPark servicing unit in May 2024. In one case, a disabled individual from Nevada received a check that bounced, incurred a $40 charge and the replacement followed 5 weeks later without reimbursement of the bounce fee.
Several leading experts have concluded that you may eventually get your money but there may be a delay, as we've seen in the SuttonPark matter. For some that had rent to pay and depended on the incomet that's just not acceptable.
But in other cases you could incur an unknown cost to protect your rights. Such unknown potential costs pose a potential risk to you because they may come at a time that you can least afford it. As cumbersome as it may seem, please make sure that you read any documents carefully and, if possible, have them reviewed independently. As you weigh the pros and cons of entering into a deal to sell the rights to your annuity payments, it's important that you compare the relative size of either the servicing factoring company or the servicing company, if different, to the company that issues or will guarantee your structured settlement if you simply do not go forward with the structured settlement factoring transaction. If the servicing company is bonded (or there is a back-up servicing company) you should add that company to the comparison.
(4) Does selling a structured settlement to buy a depreciating asset make any sense to you?
If your intention for your structured settlement payment rights is merely to go shopping or take a vacation, it is advisable to consider alternative options such as using layaway or postponing the purchase. A significant potential error is exchanging income-generating asset with a fair rate of return for a reduced amount of cash, which is then spent on another asset, such as a boat or sports car, that is certain to depreciate in value immediately upon use..
(5) Seek independent professional advice from someone who is truly independent
If you are contemplating the sale of all or part of your structured settlement payments you should contact a settlement planning professional or a financial planner familiar with such transactions who can assess your needs. Plan ahead if you can so that you don't succumb to a desperation move. Consider the conflict of interest that may arise by simply relying on the factoring company representative for planning advice. Some sleazy structured setttlement payment buyers will lead you to believe that their lawyer represents you. Check their qualifications. Ask them to put in writing how long they've been doing this. What professional designations do they hold that lead you to believe that they know about structured settlements? It's astonishing that a number of them are advocating trading your structured settlement for an asset guaranteed to depreciate in value! They may also not be qualified to give this advice.
(5) Don't treat the process of selling structured settlement annuity payment rights as if you are going to a "pawn shop". Sadly we receive calls from people who sold the security and future guarantees of their structured settlements, for a discounted amount of "cash now" years ago, now wondering if there's anything that they can do now to get their payments and security back. Take your mama's advice and "shop around". Don't throw your shopping instincts out the door! Many people are victimized through laziness and ignorance. A court will generally see if the effective discount rate being charged to you is reasonable. But the Court IS NOT charged with finding you the best rate.
III CAVEAT VENDITOR (Structured Settlement Seller BEWARE!)
(1) Your payments are already being discounted when you sell your structured settlement payment rights. You will always lose money by selling your structured settlement for a lump sum of cash. It's simply a matter of how much. ALWAYS shop around. One personal injury lawyer from Houston Texas, advised his Louisiana client to take a structured settlement in the summer of 2015 and by December of 2016, through an offshore company with the same phone and fax numbers as his law firm, attempted to buy the client's Prudential structure at an effective discount rate of 22% (more than three times a fair market rate at the time)! The cost to the seller was huge, well over $1 million.
(2) We've seen factoring companies entertain the purchase of structured settlement payment rights from a structured settlement just issued! The capital loss is huge. Don't do it!
(3) We have seen both sophisticated and unsophisticated annuitants who are seduced by perceived investment opportunities. Before doing anything, consider the current market environment. Do you really want to trade "on time every time" for volatility or uncertainty? Consider contacting us or someone who can perform a Monte Carlo analysis, to evaluate your current and future needs and how you would be affected by the sale of payments at a discount followed by investments in equity markets.
(4) IMPORTANT TIP! Some settlement purchasers are sending mailers claiming to be what seems like a government agency. The companies are engaging in fraudulent advertising. You do not need to register your structured settlement with any "agency" and your structured settlement does not need to be audited.
IV You also must understand the transaction.
It's critical to your long-term financial security
A structured settlement factoring transaction involves several elements which can really add up:
(1) The discount rate which is the rate that the factoring company applies to your future benefit payments to come up with what those payments are worth in today's dollars Always ask for the "effective discount rate". This is the rate that takes into account all of the costs identified here in this section. It is the only way to really appreciate the cost of what you are contemplating doing and compare it. When credit is tight discount rates get pushed upward, meaning even less cash from the "cash now" pushers.
Always shop around
Not shopping around could be an unmitigated financial disaster. in October 2015, a young man from Long Island New York was shafted for a seven figure profit spread because he did not shop around. In November 2024,
a Queens New York young man stood to lose more than $500,000 (if the judge approved the transfer petition) because he didn't shop around enough. Be mindful that just shopping around to related structured settlement factoring companies may not be adequate.
Some smaller deals may bear higher discount rates due to the proportion that legal fees represent of the overall deal. Life contingent deals typically bear higher discount rates, due to the higher risks borne by the buyer and whether or not the buyer takes a hedged position (life insurance required) which adds to the cost.
(2) The profit margin for the investor which can vary by company and transaction.
(4) Legal and Court costs to achieve a "qualified order".
V. Beware Misleading Advertising and Lies from Structured Settlement Payment Buyers
Some established factoring companies do responsible advertising, but many do not. Then there are individuals who factor on a part-time basis,or make money posting bogus "opinions" and "stories" which seem to relate a real-life experience that prove to be little more than dubious endorsements to draw you in to the main event, which is getting you to part with long term financial security, at a big discount, through a factoring company.
Structured settlement annuitants should know that some of the current and former issuers of structured settlement annuities, like John Hancock, will actually commute your annuity internally if presented with a "qualified order". Berkshire Hathaway has a Hardship Exchange Program with a low discount rate. So consider approaching the structured settlement annuity company as part of your research. You just may find that the commuting company's "effective discount rate" is less than the one embodied in the offer from a third-party factoring company. At the very least you should be able to use this as negotiating leverage with any alternative buyer.
VI. Don't Get Hooked on Sell Structured Settlement Crack. Write Note to Future Self Today!
Selling structured settlement payment rights should include writing a note to your future self, setting forth your reasons for selling, so that in the future you can be reminded why your younger self took steps that affected your financial future. It may come in useful someday. Write a letter to yourself now at futureme.org
Please contact us if you have any questions. We're here to help you better understand your options.
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Last updated March 4, 2025
Structured Settlement Watchdog®
Being pressured to sell structured settlement by structured settlement buyers? Receiving incessant calls, texts and emails from strangers offering you pennies on the dollar to sell structured settlement? Are buyers aggressively targeting your teenager? If you have a question, I'm here to help. Call 888-325-8640 or send me a message and I'll be in touch.
