Some companies that offer one-time lump sums in exchange for rights to court-ordered settlements have, in recent months, caught the attention of news media and a federal oversight committee.
In this issue, we’ll talk about what’s going on.
*** Before we go any further, it’s important to note that if you are considering agreement to a lump sum payment for your structured settlement, it’s imperative that you talk with your attorney first so that you thoroughly understand any potential deal before signing you name.***
How Structured Settlement Factoring Works
Recipients of structured settlement payments may find themselves in need of more money in the short term. A structured settlement factoring company will offer to purchase the rights to the income stream for one lump sum payment.
For the protection of consumers, 49 states have established protection laws that mandate a court approval for the transfer of a settlement.
Federal Agency Sues Maryland-Based Company
In November, the Consumer Financial Protection Bureau sued Access Funding. The agency accused the Chevy Chase, MD firm of taking advantage of people who had been awarded court –approved settlements.
According to their suit, the CFP said that the lump sum payments offered by Access averaged about 30% of the present value on future payments.
Additionally, Access is accused of
- Steering potential clients to a lawyer who was supposed to provide consumers advice but was instead working for Access and offered no meaningful advice at all
- Lied to consumers in convincing them that they were obligated to continue with the agreements even if they had doubts
Woman Sells Settlement Worth $400,000 For Fraction Of It’s Worth
Last April, CBS News profiled a victim who had been exposed to lead paint as a child and now suffers from irreversible brain damage.
Her family eventually settled with two landlords for $630,000 and the funds were placed in a structured settlement that would provide her with monthly payments for 40 years.
However, she was inundated with fliers from structured settlement factory companies telling her she could have a lump sum payment after she signed her name and got a judge to approve the deal.
When the deal was complete, she had sold her payment stream – valued at $408,000 – for just $66,000.
If You’re Thinking of Selling Your Revenue Stream, Talk With Your Attorney
Again, if you have a structured settlement in place, it’s crucial that you speak with your attorney first
If you’ve been injured because of someone else’s negligence, call us here at The Fitzgerald Law Firm; the first consultation is always free and our number is 800-323-9900.