"Want A Better Payment Structure: Sell Settlements for Cash" screams the headline at Settlementstocash.com, apparently the alter ego of Prosperity Partners, Inc. (a/k/a PPI Cash according to the domain registration).
Something of a woofer for the structured settlement watchdog…
A Flexible Deferred Payment Plan After You Sell for Pennies on the Dollar?
"We also offer a more flexible deferred payment plan as an alternative to the restrictive disbursement schedule imposed by the payment structure from settlements and annuities"
Hmm..wonder what that is…? and… let's try to figure if this makes sense.
(1) Evidently you are expected to sell your structured settlement (annuity) payment rights in exchange for a deep discounted lump sum of cash and then you will get another deferred payment plan. Is it tax-free? Probably not.
If you are thinking about doing business with these folks or any other factoring company with a similar scheme you'd better ask that question!
(2) Is it an insurance product? Probably not.
We previously reported that a licensee search conducted through the Florida Division of Financial Services showed neither the firm, nor firm's principal Wayne Calhoun nor Jason M. Rigler, its director of marketing, who can count the seminal "Structured Settlements Are Like Ants" among his works, were licensed in Florida or appointed by any insurance companies, in Florida. A search conducted today shows that neither of those parties are currently listed as licensees or appointees in Florida.
(3) If it was an insurance product such as a deferred annuity it might not make sense because you'd effectively first pay a deep discount for cashing out your rights and then pay again after that with the follow on deal. Structured settlement payment recipients you are paying the factoring company by accepting that huge discount!. Then you are paying a commission on whatever other financial product that the scheme requires whether that be (a) commission to an insurance agent for another insurance product or annuity or (b) trustee fee to a trust company or (c) a portfolio management fee to a money manager and you are giving up tax-free income for tax-deferred (which means you eventually have to pay taxes) or taxable income
Holy Light Bulbs Batman! Is this what JG Wentworth means when it talks about "restructured settlements" on Restructuredsettlements.com? (see January 15, 2006 post on that subject!)
Make sure you look at the mathematics! Ask the factoring company, advanced funding company, or buyer of structured settlement payments rights, for a written projection of when you are expected to break even. If a purchase of securities is being suggested remember that securities fluctuate and if you read the legally required disclosures you will find that nothing is guaranteed.
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