Selling monthly structured settlement income payments is like giving yourself a demotion at work.
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.
Don’t shoot first and ask questions later!
Don’t demote yourself out of your income.
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.
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.
WARNING: If you find yourself in a Zoom or Teams call with someone wearing a golf shirt with the logo of the life insurance company which issues the annuity that funds your structured settlement payments and the conversation turns to a solicitation to sell your structured settlement payments, it’s a scam. End the call as soon as possible. Why would you want to deal with anyone who lured you in under false pretenses? Save all texts and communications.
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.
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 Phillip 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 d/b/a 123 Lump Sum New York State Supreme Court County of Monroe Index Number E2020003377]. Details of proceedings can be found on the free NYCEF IAPPS search by entering the case number. The Lape case is set for trial in New York State Supreme Court County of Monroe, located in Rochester New York, in December 2025.
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.
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.
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 (before comprehesive reforms in SC following a devastating McClatchey expose that also led tocomprehensive victory for Badger family victims against Ryan Blank and his entities, the guardian ad litem and various law firms associated with the factoring companies and purported Independent Professional Advice.
See John Darer’s write up on his Watchdog Blog Ryan Blank the Sequel | Settles with Murdaugh Victim Badger Over Predatory Structured Settlement Factoring – Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews, dated September 25, 2024
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?
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.
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.
John Darer is widely recognized as the Structured Settlement Watchdog, a pro bono role he has served for nearly 21 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.
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) We may refer individuals to several companies we are familiar with and reserve the right to charge a fee for this service, proportionate to the service provided. No fee will be charged to any annuitant for whom we placed the structured settlement annuity as the broker or co-broker.. In other instances, if a fee is applied, it will be fully disclosed. It is noted that some structured settlement brokers and settlement planners allegedly conceal the fact that they receive referral fees, the amount of such fees, and the impact those fees have on the cash the seller receives or the amount of future payments required to cover these fees.
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? Certain structured settlement factoring companies contribute significant donations to state trial lawyer associations, leading to their designation as “partners” by the recipients.
3. We DO NOT sell protected information to factoring companies, factoring brokers or list brokers, under any circumstances.
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 2026? 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.
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?
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.
Unfortunately the information given to sellers and investors is minimal and what is given is pretty opaque. Issues related to serviced payments from SuttonPark, once the largest aggregator and servicer of structured settlement receivables from June 2024 for 10 months, 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.
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.
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.
(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.
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.
Skipping comparison shopping is like setting your house on fire—a gut wrenching spectacle that’s terrible for your finances. Comparison shop, even if you like the structured settlement factoring company or representative, to protect yourself from a lowball first deal and a “fugazy” on the next.
Be mindful that just shopping around to related structured settlement factoring companies may not be adequate.
2. The profit margin for the investor which can vary by company and transaction.
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.
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 December 2, 2025
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 claiming to be calling “from the Court”? 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.
