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The Baloney Has a First Name | Structured Settlement Cash Now Opus

by Structured Settlement Watchdog

While we're waiting for the release of Covid-19 booster shots, here's another "jab" at the structured settlement factoring industry and the misinformation disseminated by some of its members, a apt descriptor of which shares its name with a popular processed lunch meat. 

The Structured Settlement Cash Now Opus  ( a parody)

The Baloney has a funny voice. Sounds like BlaBlaBla.

The Baloney has a first name

F-A-C-T-O-R.
The Baloney Has a second name,
Pennies on the DOLL-AR.
Oh I love to critique it everyday
And if you ask me why I'll say,    

Factoring Companies have a way with C-R-A-P-O-L-A.

 

The Baloney has a funny voice

Sounds like  B-L-A-B-L-A-B-L-A

You get your pennies and "rejoice"

Ginned up to buy an expensive car

Oh I love to critique it every day

And if you ask me why I'll say

Factoring companies have a way with C-R-A-P-O-L-A

 

The Baloney keeps on calling me

Claims to work with an insurance company

The dude was sly, I looked him in the eye

Said bro I know you're punkin' me.

Oh I love to critique it every day

And if you ask me why I'll say

Factoring companies have a way with C-R-A-P-O-L-A

 

 

 

 

 

SF Weekly Publishes the Dumbest Piece About Structured Settlements Ever, for Profit

by Structured Settlement Watchdog

San Francisco's weekly rag, the SF Weekly has published one of the dumbest pieces about structured settlements ever.  "All You Need to Know About Structured Settlements and How to Sell Them" is accredited to an unidentified paid sponsor which peddles pennies on the dollar financial smack to consumers. SF Weekly claims to be "San Francisco’s smartest publication. That’s because we take journalism seriously".  My question is where does taking in money from paid sponsors, enabling them to unload more crap than on the streets of San Francisco  intersect with "serious journalism"?

Lie #1

"It is absolutely legal to sell a structured settlement for instant cash".

What SF Weekly published  on January 16, 2021 in exchange for money from a sponsor is a total lie because  If you sell your structured settlement you will not get instant cash. A small advance perhaps, but not instant cash.

Lie #2

"When somebody plays a part in another person’s injury or financial losses, they’re compelled by a judge or jury to pay a compensation to the wronged party. This compensation is known as a settlement"

What SF Weekly published on January 16, 2021 in exchange for money from a sponsor is wrong because neither a judge nor jury awards a settlement.  The "awarded a settlement" vortex is one of the "Ground Hog Day" of financial illiteracy spread by financial illiterates in (or hired by) the structured settlement secondary market.

Ignoring the legal concept of negligence, one of the examples used in the lie, and published on January 16, 2021 by SF Weekly in exchange for money from a sponsor is "A quack doctor paying a settlement to a patient for prescribing a wrong medication or administering a wrong treatment. 

A quack doctor is "an unqualified person who claims medical knowledge or other skills"  [Source: Collins English Dictionary].

In order to practice medicine in California, one must be licensed by the Medical Board of California, which states its mission "is to protect health care consumers through the proper licensing and regulation of physicians and surgeons and certain allied health care professionals and through the vigorous, objective enforcement of the Medical Practice Act, and to promote access to quality medical care through the Board's licensing and regulatory functions".   [Source: Medical Board of California}

Taking the example of the sponsor of the article that SF Weekly took money from, would a "quack doctor" qualify for medical malpractice insurance to have money to pay a settlement?   A big part of an application for medical malpractice coverage involves credentialing. Medical schools attended, Internships, Residency, Fellowship, Other Training, details of prior coverage,  practice information, hospital staff appointments, board certifications, list of states where licensed and license numbers. List all counties and states where you are currently practicing, and the corresponding percentages of patient hours expended in each [ Sourced from application from the largest medical malpractice insurer in the United States]

What is medical negligence?

“The elements of a cause of action for medical malpractice are: (1) a duty to use such skill, prudence, and diligence as other members of the profession commonly possess and exercise; (2) a breach of the duty; (3) a proximate causal connection between the negligent conduct and the injury; and (4) resulting loss or damage.” (Lattimore v. Dickey (2015) 239 Cal.App.4th 959, 968 [191 Cal.Rptr.3d766].)

Lie #3

In describing how settlements are paid. SF Weekly Publishes Lie #3 on January 16, 2021, in exchange for money from one of its sponsors , that a settlement is paid as a one-time payment, wherein the offender pays the wronged party compensation they're owed in one go. Alternatively it is described as a structured payment wherein an offender agrees to pay a regulat stream of payments.... The latter is also known as " structured settlements"

• An offender is someone who commits an illegal act.
• Criminal negligence is the reckless disregard for the safety or life of another human being. An act of negligence that is so serious it could constitute a criminal offense, e.g. the negligence regarding the care of a child is so severe it would make the accused criminally responsible.
• Then there is the case of Mens Rea. Did the doctor have it?  To illustrate, we'll  go old school on this one with a classic scene from "See No Evil Hear No Evil"
  

Generally structured settlements settlements are entered into by Defendants and Insurers (in some cases qualified settlement funds) as consideration for a release of liability from claimants or plaintiffs.

Lie #4 Published by SF Weekly January 16, 2021, in exchange for money from a sponsor

"You’re not breaking any law by selling your structured settlement. What you’re simply doing is borrowing from your future payments. It is still your money, only that you’re getting it before the due date".

A structured settlement transfer is a sale and irrevocable assignment of structured settlement payment rights for pennies on the dollar. You will ALWAYS lose money.

Lie #5 Published by SF Weekly January 16, 2021, in exchange for money from a sponsor

"This rate usually ranges from 9 to 20 percent, depending on the perceived risk associated with your payment" says the article. Factoring companies charge a discount rate on the sale of structured settlement payments. Sellers get a percentage of the present value. That is literally only pennies on the dollar. But the reality is that rates are available well below 9%. Don't be a sucker consumers!

 

 

 

Selling Your Structured Settlement Payments For a Down Payment on Home: Good or Bad Idea?

by John Darer CLU ChFC MSSC RSP

Should you sell your structured settlement payments to finance a down payment on a home, as a number of sell your structured settlement companies suggest?

Examples

Client First Funding  "Your current structured settlement or annuity payments may be paying income for many years to come but you have specific housing needs today. A lump sum payment may be just what you need for a down payment on a new home".

"Whether you want to buy a new house...selling structured settlements to Woodbridge Structured Funding, LLC can put your award to work today"

Comments 

  Saving for a down payment on a home requires financial discipline. When you achieve your savings goal and use the money for a down payment, the money comes out of your savings. In other words, it is generally not borrowed or financed.

The fact that you are making a down payment means that you are contemplating borrowing money to purchase your home. At the time of posting the average 30 year mortgage rate was 4.21% and 15 year mortgage 3.37%  (Source: Bankrate.com)

Selling structured settlement payments to raise money for a down payment means that you are financing the down payment. Depending on which cash now pusher you select you could be financing the down payment for your home at a rate of 18% or higher! The rate I'm talking about is the effective discount rate that is quoted that includes all origination fees, court filing fees, legal fees and commissions paid to the factoring broker,  your settlement planner or financial advisor, if applicable.

Your structured settlement represents a stable source of guaranteed income. It's boring. It lacks sex appeal. You won't find it in trendy stores.  But having a steady supply of income means a lot in these days of economic uncertainty, even if it means waiting a few more months or years.

Think very carefully  before you sell  structured settlement payments to finance your down payment on a home because home ownership may not be all that it's cracked up to be:

1. "The economic recovery is in a bad way. To get it back on track, the housing market will need revival. And yet, three years after the economic crisis (and after bailouts, multiple rounds of stimulus, and much toiling over the national debt) housing numbers are getting worse.   August 25, 2011  Time magazine on-line"  (Roya Wolverson)
2. Low appraisals are being blamed for slowing home sales in many areas of the country as new appraisal guidelines go into effect.  Housing Predictor.com  September 5, 2011
3. Bargain hungry investors are searching for deals, but their ranks are thinning as the scavengers realize the market isn’t what it used to be – not even since the beginning of the year.  Housing Predictor.com  August 30, 2011

( Emphasis ours)

In addition to the possibility of effectively borrowing money to buy something that may decline in value, you need enough money to maintain the home, repair the home (when necessary) and pay taxes on the home.  If you have to "rob from yourself" to make the down payment, how are you going to pay THAT?  Even if the home appreciated,  compare the long term return on real estate to your cost of money your effectively incur when selling the structured settlement payments to the cash now pushers.

 Don't let short term thinking get your ship sinking!

Factoring Company Blunder In "Under Seal" Case to Devastating Effect

by Structured Settlement Watchdog®

A factoring company's failure to respect an "under seal" Court order caused unwanted solicitation of a seller's fellow siblings who were victims of sex abuse and were also receiving structured settlement payments as part of the resolution of their lawsuits.

After one of the siblings attempted to sell their structured settlement payment rights to one of the factoring industry's "household names",the other siblings began to receive unwanted solicitations from other factoring companies seeking to buy THEIR structured settlements. Apparently, to some factoring companies  "sniffing" court documents is like "sniffing glue". In my opinion it's like a loaded diaper, it stinks!

 

 

With no laws governing the solicitation of structured settlement recipients by structured settlement cash now companies, the potential for abuse of structured settlement recipients continues.

Be sure to watch the debate NASP's Matt Bracy and I had on the subject of factoring licensing and regulation which will air on Legal Broadcast Network.

"We Buy Structured Settlements" Say The Ads. Yeah right!

by Structured Settlement Watchdog

"We Buy Structured Settlements! We Buy Structured Settlements! We Buy Structured Settlements!" cry out the endless ads all over the internet and print media. But is it really true? Can those advertisers indeed buy structured settlements?

Who buys structured settlements? First let's look at the definition of structured settlement under the United States' Internal Revenue Code.

For purposes of Federal taxation,  a structured settlement is defined by IRC Section 5891(c)(1) as an arrangement that meets the following requirements:

i.  A structured settlement must be established by:

(a)    A suit or agreement for periodic payment of damages excludable from gross income under IRC Section 104(a)(2); or

(b)    An agreement for the periodic payment of compensation under any workers’ compensation law excludable under Section 104(a)(1); and

ii.  The periodic payments must be of the character described in subparagraphs (A) and (B) of IRC Section 130(c)(2) and must be payable by a person who:

(a)    Is a party to the suit or agreement or to a workers compensation claims; or

(b)    By a person who has assumed the liability for such periodic payments under a Qualified Assignment in accordance with IRC Section 130.

Patrick J. Hindert of S2KM, and co-author of Structured Settlements and Periodic Payment Judgments also defines a structured settlement as a "package of financial and/or insurance products, generally including periodic payments, that a claimant accepts to resolve a personal injury claim or to compromise a statutory periodic payment obligation."

If one accepts the definitions included in the Internal Revenue Code, as well as from one of the industry's foremost scholars, then those advertisements are false. Let's elaborate.....

When a structured settlement is created who actually buys the qualified funding asset (generally a structured settlement annuity, but can be a US government obligation)? In the majority of cases the periodic payment obligation is assigned to an assignee, by way of a qualified assignment (referred to in the IRC definition). If this is the case then the assignee receives consideration for taking on the assignment and buys the structured settlement annuity. If the case is unassigned then the Defendant or The Defendant's Insurer buys the structured settlement annuity. In either case the "buyer" buys the structured settlement from a licensed insurance agent/broker.

Other than the above you can't buy a structured settlement. A factoring company, such as any one the advertisers in question, cannot buy a structured settlement unless it is a Defendant or Insurer on behalf of the Defendant and the case does not utilize a qualified assignment, or it is acting as an Assignee. I have no knowledge of of any scenario where this would be the case.

A structured settlement factoring transaction accurately describes what is really happening and its right there in the Internal Revenue Code as such. A structured settlement factoring transaction is one which effects the transfer of the structured settlement recipients rights to receive the future structured settlement payments (future periodic payments). "We do structured settlement factoring transactions", or SSFTs, or FTs, or TPPRs ("transfer of periodic payment rights"), or whatever, just doesn't sound as sexy and simple as "we buy structured settlements" and of course it is more of a mouthful to say.  I guess the truth is hard to swallow.

Last updated September 5, 2021