If you are selling your structured settlement in September 2012, can a settlement purchasing company prevent structured settlement servicing?
In discussing important consumer criteria, one settlement purchaser says when selling your structured settlement
"it isn't all about the price either. It's about:
- knowing you will be guided through the process in an easy and comfortable manner.
- not having your payment stream 'serviced' and payments you don't
wish to sell put under a company's control, because maybe you will find
a better offer down the road if you wish to sell again"
What is Structured Settlement Servicing?
Structured settlement servicing comes about if you are only selling part of your structured settlement payment. It is my understanding that most life insurance companies will not split annuity payments. THIS is the reason there is a need for servicing and the scenario where servicing applies. If, for example, you have a structured settlement that is funded with an annuity from New York Life Insurance Company and you're content to continue receiving payments as scheduled, there is no need for structured settlement servicing. Servicing, on its most basic level, means that the entire structured settlement payment (not just the amount sold) goes to the factoring company, its servicing arm or a third party servicing company which splits the payment. The result is that the factoring company receives the transferred structured settlement payment rights it bought from the seller and passes the difference on to the selling annuitant.
The settlement purchaser who published the above cited text about servicing insinuates that some factoring companies who act as servicers block the implementation of competing offers to purchase if a selling annuitants wishes to sell additional structured settlement payment rights at a later time. This is not a unique issue and one that the settlement purchasing company's competitor, RSL Funding, has raised in litigation against another competitor. The settlement purchaser insinuates that doing business with the settlement purchaser will prevent such servicing. How can this be?
The fact remains that as long as the status quo remains, a factoring company cannot control whether there is servicing or not if there is a partial "dice" of structured settlement payment rights.
The Structured Settlement Watchdog™ John Darer™ has written extensively on issues related to servicing, including questions about the rights of structured settlement annuitants to remaining payments if the servicer were to go bankrupt. His two part video podcast series here and here on the topic on LBN, which included an interview with Dallas bankruptcy attorney Bruce Akerly, was followed by a white paper and presentation on the topic by the same attorney at the National Association of Purchasers annual meeting in November 2009. I understand that it is common practice for there to be a back up server as well, but partial sellers should ask the question.
Here's a selection of some of John Darer's blogs on structured settlement servicing.