Each decision to sell structured settlement payments is unique to the individual. Long ago I learned not to rush to label reasons as “good” or “bad” in the abstract. Ultimately, reasons for selling payments are as varied and complicated as people themselves. For example, you could say it is a “bad” reason to sell payments so you can take a vacation. What if the seller is dying, and this is an effort to spend good time with his family? Imagine a seller’s reason to sell is that she just doesn’t want to get the checks on a monthly basis anymore. At first blush that may seem like a financially irresponsible position. What if you learned that each month she gets the checks, she is reminded of the injury that she suffered, and it has a detrimental impact on her psychological wellbeing? The converse can also be true. What if a seller wants to sell payments in order to pay off debt? That is a common reason for selling, and generally a pretty good one. But what if the payments he is selling would leave him with no way to support himself on a monthly basis, even after elimination of the debt?
To some, these may seem like farfetched and made-up examples, but they are actually based on real people. The state structured settlement protection acts – state laws that regulate how structured settlement payments can be sold – include a very general provision that the court must find the transfer to be in the seller’s “best interest.” There is no real definitive guidance for what that means. This was left intentionally vague, so that the judge could consider all the issues and the seller’s total situation in making the decision to approve or deny the transfer.