by John Darer CLU ChFC CSSC
Sunday's Providence Journal reports of recent judicial review of a structured settlement factoring petition in which Mr. Whipple was seeking permission from Mr. Rodgers so that he could pay a child support obligation for which he was in arrears.
Mr. Whipple was receiving periodic payments from a structured settlement he received from a car accident in the amount of $2,056 per month from April 2002 to March 2012. A total of 43 payments payments were to be transferred for a lump sum of $68,750 to be paid by 321 Henderson Receivables Origination ( an affiliate of JG Wentworth). Using the FREE factoring discount rate calculator which Structured Settlement 4Real posts on left side of its blog I was able to determine that the discount rate was 15.123%. 15.123% is hardly competitive!
Since the Judge Netti C. Vogel "vulture case", Rhode Island has been getting tough on factoring and Superior Court Justice Joseph F. Rodgers has been handling them.
Under a Rhode Island's 7 year old Structured Settlement Protection Act, judges must determine whether the transfer of structured settlement payment rights “is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents.” Judges also must ensure that those selling the payment rights have been advised to speak to a lawyer.
What is troubling however is the Providence Journal's quote of Michael Healey, the attorney general's spokesman who stated the reason for this is " It’s primarily to make sure consumers in a financially stressful situation know exactly what they are getting into when they agree to one of these structured settlements.” It is not good for the structured settlement brand when regulators fail to make the distinction between a "structured settlement" and a "structured settlement factoring transaction". While both are defined in the same section of the Internal Revenue Code (5891) they are two separate and distinct transactions.
The staff writer Edmund Fitzpatrick states inaccurately that Rodgers has handled about a dozen "structured settlement transactions" this year. Unless he is approving minor or death cases they ARE NOT STRUCTURED SETTLEMENT TRANSACTIONS!.They are "STRUCTURED SETTLEMENT FACTORING TRANSACTIONS!"
For the real details of a "Structured Settlement Transaction" involves please check out this" How Structured Settlement Works" Flow Chart
In approving the petition Mr. Rodgers told Whipple that if the back child support was not paid by June 18th or 19th Rodgers would hold Whipple in contempt.
In case you're still wondering, it's not THAT Mr. Whipple or THAT Mr. Rogers. That Mr. Whipple, actor Dick Wilson, passed away on November 19, 2007 at age 91. Fred Rogers died in February 2003 at age 74.