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Before you can sell structured settlement payments you have to get court approval. Not all cash for structured settlement sales are approved by the courts. Following are brief descriptions of five cases where once the structured settlement process hit the court approval the judge denied a sale, and the reason why the sale was denied.
One New York judge turned down a cash for structured settlement sale to Peachtree in 2010 due to an excessive discount rate, as well as a practice considered somewhat unethical as far as where in the process the legal fees were deducted. This case, presided over by Judge Ruiz, would have sold $60,677 worth of payments for $17,340, but the sale was denied. In the judicial order the judge cited a “proliferation” of disingenuous TV commercials promoting structured settlement sales that propagate an illusion that leaves people empty handed or cheated in the end.
In 2012 the courts denied Amanda Ferrer’s sale to J.G. Wentworth stating that the sale amount (receiving $15,000 for $130,000 worth of payments) was unfair.
When you want to sell payments there is a structured settlement process that you must follow. In 2010 Mr. Vincent Angelilo attempted to sell structured settlement payments to pay for school, credit card debt and dental work. The court denied his request. Why? These seem like reasonable expenses. The court cited a number of reasons. Among these are the fact that Angelilo said that he was employed, and thus could get by without his payments, yet he never provided proof of income. In addition, Angelilo did not consult a lawyer or financial advisor, as required by state law. Furthermore, the court asserted, Angelilo could get a student loan for school and pay for his debt and dental work out of his payments or his salary, thus the case was denied.
Most of the time if you have a reputable, experienced factoring company on your side they will have a pretty good idea about whether your sale is viable before you get too far into the process. In other words, they will anticipate that the court will approve your sale. However, sometimes the judge may surprise everyone and deny for some reason. If the judge denies your case but you feel that you do have a valid need and should be approved, do not get visibly upset. Keep your calm and talk to your factoring company, or call another company, to see if you can reapply and if they feel that changes should be made to your paperwork before reapplying. There have been times where a person’s sale was denied initially, but another future judge approved the sale.
Judge James Canfield denied a cash for structured settlement sale of payments from Neil Cunningham to Settlement Funding of New York. The sale of $151,702 worth of payments would have netted Cunningham $75,000, with which he planned to buy recording equipment for his own business. The judge denied the sale, saying that the cost was too high and the need insufficient.
Richard Ballos was denied selling his $225,000 worth of payments to Petitioner Settlement Corporation for $100,000. The judge said that the discount rate was too high and that the sale simply was not in Ballos’ best interests.
Earl Nesbitt, a lawyer experienced in helping buyers and sellers of structured settlement payments, said that “Judges are less likely to view a transaction favorably if the payee/annuitant is young (less than 25 years old). The typical thought process is that younger people are more likely to make unwise financial decisions. Selling structured settlement/annuity payments to “invest” in the stock market, or other passive ventures, or to put money in savings is almost always viewed by courts as unwise. The reason for this is that the payee is giving up future tax-free income/structured settlement payments (discounted to present value at a discount rate of 12 or 15%) to “invest” in assets or a venture where the return will be taxable. Economically and financially that is not a good bet.”
If you want to sell structured settlement payments it is imperative that you have a good reason, are receiving a fair rate, and are able to answer the judges questions in a way that show you to be financially responsible. Call Strategic Capital today to get on the road to approval of your cash for structured settlement transaction.