Litigation

In Act of Predation Factoring Company Uses Specious "Chicken Little" Pitch to Hock Injury Victims, Winds Up Among "Structured Settlement Illiterati"

By John Darer

One structured settlement factoring company uses a specious "Chicken Little" argument to try to get structured settlement payment recipients to sell their rights to it at a discount.

That company postulates:

"It is always possible for an insurance company, former employer, or other payer to go bankrupt or otherwise default on their structured settlement payments. In the event that this occurs, the seller is sheltered. Remember, when you sell the settlement, you are only transferring the right to receive payment from the structured settlements. You are not, however, guaranteeing the livelihood of the income stream you are selling. An income stream drying up is a risk the seller passes on to the buyer, along with the right to receive payments from the settlement.

Comments:

1. The company appears to suggest that you should effectively take a loss (the effective discount on your future payments) , to sell your conservative structured settlement payment stream from one of the largest companies in the United States or the world, to avoid bankruptcy of those entities. The factoring company makes the specious claim that you are "sheltered" by doing so. A few questions to ponder...
2. It is possible for any company or individual to go bankrupt. But how probable is it?
3. Is the probability of the insurance company going bankrupt greater than OR less than the seller going through all the money it received from the factoring company at a discount?
4. An income stream has no livelihood. An income stream provides a livelihood. Livelihood is "a means of support or subsistence" according to Merriam-Webster
5. The risk of an income stream drying up is a risk the seller retains even after the seller transfers structured settlement payment rights to the buyer. In fact the risk is even higher. A structured settlement provides a secure guaranteed income stream to a tort victim. Once the tort victim has exchanged all or part of that payment stream to the buyer at a discount , he or she must now live off of that reduced sum. It is a real possibility that the tort victim will not be able to sustain themselves on the reduced lump sum.

Full post as published by Structured Settlements 4Real on May 22, 2008 (boomark / email).