Nightmarish rip-off stories of people who had to sell a structured annuity settlement
While most businesses who can give you a structured settlement cash payout are legal, they often push the boundaries and bad things do happen. Following are four things for you to consider, and learn from, as you move forward with your structured annuity settlement sale.
Far too Little
When it comes to nightmarish rip-offs, there was one that was, fortunately, stopped before it happened. This was the case of Amanda Ferrer trying to sell $130,000 worth of payment from a structured settlement to J.G. Wentworth. The court denied the sale because Ferrer was offered just $15,000 for the payments, a ridiculous cost in our opinion, as well. This reinforced a concept that we have said repeatedly – get multiple quotes and get independent financial advice.
Some Rip-Offs aren’t so Obvious
Now, let’s do some thinking. The case of Alison Grieve is one where she tried to sell nearly $105,000 in structured annuity settlement payments for less than $40,000. The judge denied the sale, citing the discount as far too high. Yet, three years later a different judge in a different location allowed Joseph Spinell to sell $190,000 in payments to First Providian for just over $31,000. That was a much higher discount rate than Grieve was denied, and yet it was approved, Spinell netting just one seventh of the gross sum. The fact is, some rip-offs can squeak through court without being discovered.
Don’t count on others to save you!
One of the jobs of the judge who approves your structured settlement sale is to ensure that you are not being charged an extreme amount of money. However, there is no set guideline for these judges to go by. Thus, what they feel is extreme and what is extreme for your situation could vary drastically. So don’t count on the judge, or anyone else, to save you from making a bad decision. Do the research on your own and ensure that selling at the rate you were given is the best decision for you.
Ripping Yourself Off
One structured settlement cash payout rip off story comes not from being ripped off by a company, but by making a mistake and ripping off one’s self. Joe sold his structured annuity settlement payments because his car broke down, his roof was leaking and he needed money now. A judge approved the sale, even though it left Joe, who was working only part time, with insufficient money coming in each month to pay all his living expenses. Eventually, unable to secure full time work, Joe lost his home to foreclosure, so the roof didn’t matter much.
Earl Nesbitt, a lawyer experienced in helping buyers and sellers of structured settlement payments, said that
“Payees who are unable to work and depend entirely on their structured settlement payments for their monthly income and necessities should think long and hard about these transactions and should endeavor to retain sufficient income and funds to ensure that they will not be left destitute.”
The Devil is in the Details
Another way that you can rip yourself off is by not having a professional look over your paperwork. Attorney Earl Nesbitt, mentioned above, said that sellers should beware and read their paperwork carefully. You can’t just yell, “I have a structured settlement and need cash now!” and expect to have a safe, positive transaction. You have to do your due diligence before you sell structured annuity settlement payments.
Specially, Nesbitt advises sellers to, “Make sure that the transaction documents do not include a security interest or right of first refusal in payments that the payee is not being assigned. For instance, say a payee is receiving $2,000.00 per month for life with 30 years (through 2025) guaranteed. The payee decides to transfer/assign 120 partial monthly payments of $500.00 each from January 2013 through December 2022, and will retain $1,500 per month during that time period and will remain entitled to receive all payments after December of 2022. Some companies will include a security interest and/or right of first refusal in all of the payee’s future payments. That is not proper and can create a lien/claim/encumbrance on the payee’s non-assigned payments, restricting their future flexibility relative to those payments.” Sometimes you will see this in a disclosure statement, and Nesbitt cautions you to refuse to sign until the language is removed.
At Strategic Capital you never have to worry that there are hidden costs or misleading wording. We work with you to help you decide if selling is right for you and we help you to understand every step in the process. At Strategic Capital we are there for you.