Litigation

Attorney Lays Out "Cash Now Pushers' Case to Jack Up Costs To Tort Victims

By John Darer

Mike Green, Pennsylvania attorney who represents factoring companies has done a nice job of explaining some of the key concepts of factoring which appear in a post on the Settlement Capital blog (www.setcap.com)

There are some important points in Mike Green's final thoughts. He states "I sometimes see judges become concerned at an interest rate which may seem high. Sometimes proposed transactions will contain an interest rate which exceeds 20%. While, in some circumstances, that interest rate is indeed unreasonably high, other times that rate may be reasonable. The judge and the transferor need to understand that, in general, the effective interest rate is based on the size of the payments to be transferred,the dates that those payments will be transferred and the perceived viability of the annuity company, considering also the factoring company?s overhead and profit. The factoring company also bears the risk of inflation. If inflation increases, it acts as a discount rate, ?diminishing? the future value of the periodic payments. When an individual makes a structured settlement transfer, the inflationary risk (as well as the insurance company viability risk) passes to the factoring company.

?Smaller? transactions, i.e. proposed sales which involve one relatively small payment or periodic payments which are due many years in the future, will often have higher effective interest rates because of the factors described herein."

Seems like there sure are alot of ways for the "financial crack dealer" and "cash now pusher" crowd to attempt to justify their costs so the poor structured settlement annuitant gets what appears to be diddly.

Full post as published by Structured Settlements 4Real on November 21, 2008 (boomark / email).