If you sold your Structured Settlement for an immediate payout, you may have a claim! Call us today for a free consultation.
You may have seen recent news articles where recipients of structured settlements sold them for immediate cash. In these instances, former plaintiffs sold their structured settlements (settlement payments made over the course of years instead of as a lump sum) to large companies for immediate payouts amounting to pennies on the dollar of the original settlement.
The result of this is that the financial company buyers ended up with millions of dollars that would have protected them. Some of these sales gave plaintiffs as little as 22 cents on the dollar.
If you sold your structured settlement to a company for immediate cash, call us today for a free consultation at 803-991-4007.
Unfair Structured Settlement Sales Attorney
The term “structured settlement” refers to an agreement between a plaintiff and a defendant which allows the plaintiff to receive compensation in a stream of tax-free payments rather than one lump sum. It’s possible for plaintiffs to later sell their structured settlements to private companies in exchange for a one-time payment, something which is often done when a person is desperate for cash and in a vulnerable position. However, many of those companies have taken advantage of plaintiffs by buying their structured settlements for pennies on the dollar.
Former South Carolina plaintiffs who have been taken advantage of by companies purchasing their structured settlements may be entitled to file lawsuits against those companies.
What is a structured settlement?
Structured settlements were approved by Congress in 1982, and allow for plaintiffs to receive part or all of a settlement amount over the course of many payments. It is common for part of a settlement to be paid to the plaintiff immediately as a lump sum, with the rest structured over a number of years. Some even involve lifetime payments.
These types of settlements can be agreed upon voluntarily between the plaintiff and the defendant, or be required by court order (which often happens in cases involving minors and incapacitated adults).
The details of a structured settlement can be negotiated before an agreement is made, including:
- Length of the payment schedule
- How often you want to receive payments
- How much money you want to receive in each payment
- Whether you want a lump sum payment at the end
- Whether you want the payments to continue to your heirs if you die before the structure ends
Benefits of a structured settlement:
One of the biggest advantages of a structured settlement is tax-free payments. Although lump sum payments are usually not taxable either, personal injury victims do have to pay tax on interest and dividends that they receive on settlement money after they invest it. With a structured settlement you have less money in the bank and therefore a much lower tax obligation.
Structured settlements also:
- Provide peace of mind and long-term financial security
- Act as a safety net to ensure you don’t spend the settlement too quickly
- Allow plaintiffs to tailor payments to their needs
- Provide the option to set up lump sum payments for major expenses including college tuition or retirement
Selling a structured settlement
Many people choose to sell their structured settlements to factoring companies when they find themselves in need of liquid cash. Former plaintiffs can choose to sell for any reason at all, but many do so when they are in a desperate financial situation.
When a structured settlement is sold, the seller does not get the full value of their future payments. Instead, factoring companies come up with a “discount rate” they are willing to pay for your structured settlement, which typically reflects a 9% to 18% discount from the face value. However, that rate can be even higher.
The discount rate is calculated by evaluating the following metrics:
- Future value of your payments
- The factoring company’s loss of growth potential after purchase
- Number of payments you’re selling
- Dates of your payments
- Current economic conditions & market rates
- Transaction & service fees
Companies use dishonest methods to low-ball sellers
While the formula mentioned above is to be expected, not all companies follow the standard formula. Because there is little legislation on selling structured settlements, some companies prey on those who need immediate cash by offering pennies on the dollar for what would otherwise be significant future wealth. This is very disturbing, as many former plaintiffs are already dealing with debilitating injuries and trauma due to the accident that allowed them to get the settlement in the first place.
Television commercials enticing former plaintiffs to sell their structured settlements are plentiful in South Carolina, and tout the benefits of receiving hassle-free quick money. However, they fail to mention the severe cost that must be paid by sellers in order to receive that “easy money.” According to a recent analysis by McClatchy, South Carolina sellers receive an average of just 25 cents on the dollar when they sell their structured settlements to such companies. Victims who are minors are often affected by these dishonest deals. It is common for structured settlements to include cash that will be paid out to minors after they turn 18.
Contact McWhirter, Bellinger & Associates today
Former plaintiffs across the country may be entitled to file lawsuits against factoring companies that dishonestly purchased structured settlements.
McWhirter, Bellinger & Associates is highly experienced in fighting for the rights of personal injury victims, and we don’t believe anyone should be pressured into a dishonest sale.
Our attorneys are committed to helping personal injury victims who have been treated unfairly by factoring companies. We use our decades of experience and legal know-how to build strong cases for each and every one of our clients. We’re prepared to go to court whenever a settlement can’t be reached.
If you or a loved one have sold your structured settlement to a factoring company, give McWhirter, Bellinger & Associates a call today at 803-991-4007. We offer free case evaluations and have seven locations across the Midlands of South Carolina, in Aiken, Camden, Columbia, Lexington, Newberry, Orangeburg, and Sumter.