We have recently become aware of a sales practice employed by some structured settlement factoring companies, including Settlement Capital, J.G. Wentworth, Stonestreet, Peachtree and others as follows:
1. Annuitant wishes to sell only part of their structured settlement
2. Factoring company offers to buy the partial payments but sale contract provides for ALL of the payments to be transferred to factoring company and factoring company then becomes responsible for paying the unsold payments to the annuitant as and when paid to factoring company (“servicing”).
3. Annuitant then is solicited to sell the balance of the payments at a later date.
4. When or if the annuitant decides to sell later, factoring company lowballs the offer and is a captive because other factoring companies are loath to buy payments being made by their competitor.
When selling partial payments, you should be aware of this practice and avoid it.
Once payments are transferred to the factoring company you lose the benefit of an A-AAA rated insurance company being responsible for making the payment to you with all of the tangible benefits associated therewith and become dependent upon the factoring company to make the payment to you. Also, you lose the benefit of being able to have factoring companies compete for any subsequent sale because many companies may not want to rely on a competitor to pay them.
At Sovereign Funding Group we only take assignment of those payments which we buy, entitling you to receive the balance of the payments directly from the insurance company as originally bargained for.
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