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Structured Settlement Transfers: The Blunt Truth
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 many important parts of a negotiation for your payment rights. If you want cash for payments, don't be so quick to sell. Do you know that if you do sell your rights to a brokerage company you will be transferring ALL of your future payment rights to them?
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.
The only reason it would be acceptable to work with one of these companies would be if you were in serious hard times, the house will be foreclosed, etc., so your best bet is to tough it out and keep your getting your smaller payments.
Structured settlement and annuity companies profit by giving working class people like you large lump sums of money that are smaller than than the discounted face value the 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.
In CA, the Structured Settlement Transfer, SSTA, says: (1) The seller must receive disclosures about their structured settlement payments, (2) notice to the Attorney General (3) court approval.
The approval requires the company to file petitions in the county where the transferor lives for approval of the transfer. In order to grant the petition for approval, the court must find:
(1) the transfer is in the best interest of the transferor, taking into account the welfare and support of the transferors dependents;
(2) the structured settlement seller has been given the opportunity, in writing, to receive legal and financial advice and has received counsel 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 transferor understands the terms of the transfer agreement and disclosure form; and
(6) the transferor understands his/her right to cancel the transfer and does not want to do so.
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