Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews

Structured Settlement Factoring Loophole Raises Potential for "Bribes" for Pennies on the Dollar

by Structured Settlement Watchdog

Structured settlement factoring companies offer a valuable service for people in need who cannot get resources they need from other sources. Unfortunately, because sales practices of structured settlement factoring companies are completely unregulated in all but a few states, the potential for exploitation of structured settlement annuitants is a thing.

Consider this questionable approach on the website of a company called Rapid Capital LLC which uses the catchy URL rapcashnow(dot) com

"Your Rapid Card puts you in full control of your money, instantly!

From the moment you receive your personalized card, you can start receiving advances, gifts and funding straight to your hands. The card can be used as a point-of-sale credit or debit card at any store or online retailer that accepts Master Card. In addition, the card may be used at any ATM to check your balance or withdraw cash (see below for free ATM locations). As soon as your transaction is approved in court, we will distribute your funds directly to your rapid card and the funds will be available for use immediately after"

Questions about the Rapid Capital Approach on their website rapcashnow (dot) com

1. You do not have full control of your money instantly because there are structured settlement protection laws in all 50 states in the United States.  Any transfer must be approved by a judge as being in the payee's best interest and that of his/her/their dependents. That process could take 60-90 days, if approved.
2. The best that Rapid Capital, or any company like them can do is pay pennies on the dollar. No gift is going is make up for the money for going to lose by selling payments to them, or any other similar company. Don't be distracted by a shiny penny or quarter.  
3. Do the stored value cards give the structured settlement factoring company the ability to make money on the float of your money? What are those charges?
4. Is there any FDIC protection on money stored in the cards?  Read this GENERAL COUNSEL'S OPINION NO. 8—Insurability of Funds Underlying Stored Value Cards and Other Nontraditional Access Mechanisms, from the Federal Deposit Insurance Corporation  (FDIC).

The Structured Settlement Watchdog Raps Cash Now

Rap Cash Now

Trap Ka-Pow!

Cain't Be So

Unless Judge say so

If Judge say no

Ain't got no dough

Ain't really in control

Or even effin' whole

It's a trick, Rick

Quick and slick

Nothin' but rim

The pickins slim

Pennies on the dollar is the best you gonna get

I told ya so and that is effin that. 

 

 

 

 

 

Orange Blossoms, LLC Harvests Florida Man's Structure at Ridiculous Discount Rate in Tampa

by Structured Settlement Watchdog

On March  24, 2020, Lajuan Davis refused independent professional advice and paid for it by stiffing himself for the $65,000 he could have got with a 5.4% discount rate, according to our source, which would have raised $140,000 in cash for $220,000 worth of lump sum payments. He might have even been able to do better than that. Instead Davis's structured settlement was harvested by piggy Orange Blossoms LLC, which paid him only $75,000.  Orange Blossoms, LLC is located at 5300 W Atlantic Ave STE 200, Delray Beach, FL 33484, the same address and suite number as Rising Capital Associates.

The effective discount rate on the deal was 13.65% which is not even in the  ball park of competitive. And Judge Caroline Tesche Arkin approved it May 5, 2020.

In Re: Approval of Structured Settlement Payment Rights by Orange Blossoms, LLC, Petitioner and L.D., Respondent

in the Circuit Court for the 13th Judicial District of the State of Florida m in and for Hillsborough County  Case 20-CA-002916  E-Filed March 30, 2020

Payments Sold

• $20,000 due January 3, 2025
• $100,000 due on January 3, 2027 and
• $100,000 due on January 3, 2032

If Lajuan Davis needed only $75,000 then he could have kept some of his tax free structured settlement payments. Instead he effectively grossly overpaid the buyer and/or their investors, St James Receivables, LLC.

The lesson to be learned is to always shop around, no matter what.

 

 

 

 

 

 

Consumer Financial Protection Bureau Warns on Aggressive Structured Settlement "Cash Now" Deals

by John Darer CLU ChFC MSSC RSP CLTC

One of the constructive solutions that I proposed in my 2015 white paper on the structured settlement secondary and tertiary markets was there needed to be a "seller's guide" that made prospective structured settlement payment sellers more informed.  [ see The Structured Settlement Secondary Market Fills a Need But Reckless Lack of Oversight of the Secondary and Tertiary Market Creates Problems in Need of Constructive Solutions]

The Consumer Financial Protection Bureau has now Issued a Warning to Consumers About Selling Their Structured Settlements in response to "What should I know before giving up my monthly disability, personal injury or structured settlement payments in exchange for a one-time lump sum payment?"

The CFPB Warning for People Receiving Structured Settlements Thinking About Selling

"You could receive much less cash than your settlement is worth. Dealing with companies that offer lump sum payments for your disability, personal injury or structured settlement payments can be very risky. Some companies target people with disabilities who have structured settlements. If you receive a flyer or solicitation promising fast cash or a lump sum payment for your monthly payments, be aware! Consider all options, including talking to people you trust with your finances, or your own lawyer or financial counselor, before trading your future payments for instant cash".

The CFPB Offers Reasons Why Not to Take a Lump Sum?

1. It can be a bad deal for you because you may be getting a lot less money than you would get over time.
2. By giving up your structured settlement, you are signing over the right to these guaranteed payments and money that you may need for your monthly expenses for the one-time benefit of receiving a lump sum.
3. Potential risks to taking a lump sum include: spending your lump sum payment quickly and not having money for living expenses later; losing it in an investment; or someone trying to take or borrow the money from you.
4. Monthly payments don’t have those risks. Monthly payments may give you the needed stability to manage your finances, to pay your rent or mortgage, and to pay your bills. Take a hard look at your ability to manage money before you accept one of these deals.
5. Make sure you have a plan in place for how you will pay your monthly expenses without the benefit of monthly payments from your structured settlement.

The Consumer Financial Protection Bureau suggests that you

Get answers before you consider giving up your structured settlement payments:

• Do you have other options? If you are having trouble paying your bills and see a lump sum payment as an opportunity to get out of debt, first contact your creditors to see if you can work something out. If you have hospital bills, check and see if your hospital has a “charity care” program or a way of providing free or reduced prices.

CFPB Tip

Get a second opinion or an independent evaluation from a trusted source, your own attorney, or a financial adviser. Be cautious of recommendations from the company trying to get your structured settlement.

Structured Settlement Seller's Guides Need to Be Delivered On First Approach

The CFPB guide provides good information, but it only appears online. That is not enough to further the objective of keeping consumer informated.

This is a simple fix to state structured settlement protection acts that should have bipartisan support. It should not be difficult to create a seller's guide. There is a three day cooling off period ostensibly to give the seller time to think about what they are doing (presuming they understand what they are doing). Perhaps Maryland, New York, Connecticut, Florida, Virginia and others can take a leadership role in this.

In addition to what is in the CFPB posting, there needs to be a warning about being induced to participate in forum shopping, in particular what it is and the potential consequences to a seller of lying about state of domicile and a seller of structured settlement payments accepting inducements to lie. Investors in structured settlement payment rights must rely on the validity of a court order and the validity of the representations made to obtain such order for the security their investment.

Who is the Consumer Financial Protection Bureau?

The Consumer Financial Protection Bureau is a United States government agency established in 2011, that was built to protect consumers. Its free resources help you have the information you need to make informed financial decisions.

About John Darer's Structured Settlement Watchdog Commentary

John Darer's Structured Settlement Watchdog® commentary exposes bad business conduct in the structured settlement secondary market, provides relevant information that may be helpful to attorneys, plaintiffs, defendants, claims adjusters, judges, investigative reporters in local and national news media, sellers and buyers of structured settlement payment rights, law makers, law enforcement, attorneys general, the Consumer Financial Protection Bureau (CFPB), the FTC, consumer and disability advocate groups and interested others. The content is informative, irreverent and effective.  For more information about John's pro bono Structured Settlement Watchdog work, please visit the Structured Settlement Watchdog® website

 

Cash Now Regrets | The Long Term Consequences of a Bad "Cash Now" Decision

by Structured Settlement Watchdog

I often receive a call or an email from someone who sold the rights to their structured settlement payments to a factoring company, settlement transfer company, or settlement purchaser, who now regrets their decision and is seeking recourse. Unfortunately for many of them it's a case of caveat venditor, or "seller beware"

Today's email involved a gentleman who, in 1997, sold rights to $867,000 in future payments over the then following 23 years to JG Wentworth for $110,000! That was a hefty discount even then. The payment rights sold were deferred tax free lump sums clearly set to milestone years in this man's life. Clearly he wishes he had those structured settlement payments to look forward to now.

If you are considering selling your structured settlement payment rights speak with a financial professional, unrelated to the company seeking to buy your payment rights. to make sure there are no better options. At the very least, sleep on it and then, with a fresh mind, think of the long term implications. Learn from the experiences of these other folks.

And read this!

Selling A Structured Settlement in 2023? Get The 411 on Cash Now. Don't Be a Victim (4structures.com)

And, if you have resolved that you must sell, don't succumb to pressure tactics from the buyer. If you make it through the Court approval process now required in all  50 states and Washinbgton DC,  make sure to write down your reasons on a piece of paper, and save it. This way should you come to regret the decision in the future you can open your "time capsule" and have a reminder of why your younger self traded away your long term security. Learn from the experiences of others!

Last updated September 4, 2023