Structured Settlement Funding

Structured settlement funding was on the mind of the middle aged couple who had won a three hundred thousand dollar lawsuit and bought an annuity so that the wife could retire and take care of her aging father. But the elderly man had recently died and now the husband had been diagnosed with a potentially life threatening illness and had to quit working. The annuity provided the couple with about two thousand dollars a month, but it was not enough to take care of the medical bills beginning to pile up. So the two sat in an office of a factoring or transaction company that specialized in structured settlement transfer of lottery winnings, annuities, lawsuit judgments and other monthly payment providers. An agent of the company began sharing with the couple the advantages of getting a settlement funding transaction completed so that the couple's immediate needs could be met. The agent mentioned that the couple, with a financial plan to transfer monthly payments to a lump sum would have the advantage of being able to respond to their immediate financial needs. But there were some things he did not want to say, but the agent was mandated by law to disclose.

The Structured Settlement Protection Act of 2002 changed the way factoring or structured settlement transfer companies did business. Before that legislation became law, any person requesting allocated money be changed to a lump sum allocation was often taken advantage of by the companies offering to buy annuities or other monthly or yearly allocated financial plans. Between 1988 and 2002, factoring and transfer companies were at odds with the issuers of such things such as annuities, typically life insurance companies. Often, many holders of structured settlement money had very negative experiences with factoring and transfer companies, including having information withheld, and the fact that lump sum payments could affect, in adverse ways, the tax liabilities of the clients. The Structured Settlement Protection Act placed into law a number of safety nets for Americans facing the same issues as the couple.

The law mandated a number of safeguards for those wanting seeking structured settlement allocations. This legislation demanded that all transactions going through a factoring or transaction company as this couple was doing be approved by a state court, which would investigate to ascertain if the structured settlement transfer to a lump sum payment is good for the client and the client's dependents. Additionally, the issuers of annuities, the life insurance companies, were brought into the loop, contrary to factoring companies' standard policy of years past. Often, the life insurance companies were caught off guard when lump sum settlements were arranged, and the new owner of the annuity was discovered. The Structured Settlement Protection Act also called for the client receiving a lump sum payment to obtain professional counsel on every aspect of the transaction's affect upon the future quality of life for the client.

For the couple looking for immediate help, these safeguards meant not only peace of mind for what they were about to do, but also gave them an appreciation for all the factors going into a structured settlement transfer. After hearing all the information given to them by the agent for the factoring company, the couple decided to go and speak to one of dozens of counselors suggested by the brochures from the federal government. The counselor advised the couple to recognize that the factoring company had only one thing as their agenda, and that was to make money on their situation. To use a company that offered structured settlement funding, the couple would lose at least thirty percent of the value of their annuity. Would the transfer be worth it? "If any man come to me and hateth not his father, and mother and wife and children and brethren and sisters, yea and his own life also, he cannot be my disciple." (Luke 14:26)

Having gone through the structured settlement funding process so far, the couple decided that they still needed to have money now for the financial crisis that loomed in front of the pair. The next step forward was to petition the circuit court for an agreement to the structured settlement funding agreement with the factoring company. The court agreed to the transfer after having seen evidence that the agreement would not affect anyone except the husband and wife and that they had indeed talked to an approved financial advisor. The only remaining question was how long a wait they would have before they received the lump sum on which an agreement had been made. The factoring company told them it would typically be between eight and twelve weeks.

The couple went home that day, delighted that such an option had been afforded to the pair, and that they were privy to all the information that eased their minds. The wife was actually looking forward to returning to work, and began to brush up on the latest developments and skills needed in her vocational field. The husband actually looked forward to the treatments he was receiving because all medical bills not covered by insurance would be covered with the money they would soon have in the bank. For them, an allocated settlement funding company had offered and given the couple a new lease on life. Unfortunately, for many people before them, there were many cases of being taken advantage of, and even ripped off, but sometimes it takes trail blazers going ahead to make life better for those soon to arrive.

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