by John Darer CLU ChFC MSSC RSP CLTC
One of the constructive solutions that I proposed in my 2015 white paper on the structured settlement secondary and tertiary markets was there needed to be a "seller's guide" that made prospective structured settlement payment sellers more informed. [ see The Structured Settlement Secondary Market Fills a Need But Reckless Lack of Oversight of the Secondary and Tertiary Market Creates Problems in Need of Constructive Solutions]
The Consumer Financial Protection Bureau has now Issued a Warning to Consumers About Selling Their Structured Settlements in response to "What should I know before giving up my monthly disability, personal injury or structured settlement payments in exchange for a one-time lump sum payment?"
The CFPB Warning for People Receiving Structured Settlements Thinking About Selling
"You could receive much less cash than your settlement is worth. Dealing with companies that offer lump sum payments for your disability, personal injury or structured settlement payments can be very risky. Some companies target people with disabilities who have structured settlements. If you receive a flyer or solicitation promising fast cash or a lump sum payment for your monthly payments, be aware! Consider all options, including talking to people you trust with your finances, or your own lawyer or financial counselor, before trading your future payments for instant cash".
The CFPB Offers Reasons Why Not to Take a Lump Sum?
- It can be a bad deal for you because you may be getting a lot less money than you would get over time.
- By giving up your structured settlement, you are signing over the right to these guaranteed payments and money that you may need for your monthly expenses for the one-time benefit of receiving a lump sum.
- Potential risks to taking a lump sum include: spending your lump sum payment quickly and not having money for living expenses later; losing it in an investment; or someone trying to take or borrow the money from you.
- Monthly payments don’t have those risks. Monthly payments may give you the needed stability to manage your finances, to pay your rent or mortgage, and to pay your bills. Take a hard look at your ability to manage money before you accept one of these deals.
- Make sure you have a plan in place for how you will pay your monthly expenses without the benefit of monthly payments from your structured settlement.
The Consumer Financial Protection Bureau suggests that you
Get answers before you consider giving up your structured settlement payments:
- Do you have other options? If you are having trouble paying your bills and see a lump sum payment as an opportunity to get out of debt, first contact your creditors to see if you can work something out. If you have hospital bills, check and see if your hospital has a “charity care” program or a way of providing free or reduced prices.
CFPB Tip
Before diving headfirst into any offer, get a second opinion from someone who’s not trying to sell you something—like your lawyer, financial adviser, or that one friend who always reads the fine print. And remember, advice from the company eager to snag your structured settlement might come with a side of bias.
Better yet seek Independent Professional Advice. Independent Professional Advice (IPA) for Structured Settlement Sellers
Structured Settlement Seller's Guides Need to Be Delivered On First Approach
The CFPB guide offers valuable information, but it's only available online. This isn't sufficient to achieve the goal of keeping consumers informed.
This is a straightforward amendment to state structured settlement protection acts that should garner bipartisan support. Developing a seller's guide should not be a challenging task. The three-day cooling-off period is intended to provide sellers with time to reconsider their decisions, assuming they fully comprehend the implications. States like Maryland, Minnesota, New York, Connecticut, Florida, Georgia, Louisiana, South Carolina, Texas, Virginia, California and others could potentially take the lead on this initiative..
In addition to what is in the CFPB posting, there needs to be a warning about being induced to participate in forum shopping, in particular what it is and the potential consequences to a seller of lying about state of domicile and a seller of structured settlement payments accepting inducements to lie. Investors in structured settlement payment rights must rely on the validity of a court order and the validity of the representations made to obtain such order for the security their investment.
Who is the Consumer Financial Protection Bureau?
The Consumer Financial Protection Bureau is a United States government agency established in 2011, that was built to protect consumers. Its free resources help you have the information you need to make informed financial decisions.
About John Darer's Structured Settlement Watchdog Commentary
- John Darer's Structured Settlement Watchdog® commentary aims to address and rectify any misinformation surrounding structured settlements and settlement planning, no matter where it arises.
- John Darer fills in the gaps and enhances incomplete media coverage on topics related to structured settlements and settlement planning.
- John Darer sheds light on unethical practices in the structured settlement secondary market while offering valuable information for attorneys, plaintiffs, defendants, claims adjusters, judges, journalists in local and national media, buyers and sellers of structured settlement payment rights, lawmakers, law enforcement, attorneys general, the Consumer Financial Protection Bureau (CFPB), the FTC, consumer and disability advocacy groups, and others. The content is engaging, informative, and impactful.
For more information about John's pro bono Structured Settlement Watchdog work, please visit the Structured Settlement Watchdog® website
Last updated July 11, 2025