by Structured Settlement Watchdog
Structured settlement payment servicing exists because a selling annuitant only wishes to make a partial sale
- a selling annuitant wants to sell only part of a stream of structured settlement payments;
- or part of a lump sum payment from their structured settlement.
I have addressed the topic of servicing structured settlement payments, including the reasons for its existence, the risks it poses to the seller, and the long-term loss of continuous branding opportunities for the annuity issuer.
For example
Forced “Servicing” of Structured Settlement Payments Nixed by TX/CA Courts October 3, 2015
The Latest Scheme is Promissory Notes from the Buyer
The Promissory note scheme that is being fostered in some pockets of the structured settlement secondary market is a scheme that is less safe:
- Removes the right of interested parties to object if they see something fishy or non compliant, particularly in follow on deals.
- The disclosures may not be complete enough for an unsophisticated seller to understand the ramifications, namely the shuffling of creditors from as secure one to a much less secure one. A seller could conceivably be trading secured creditor status in a 100 year old regulated insurance company for general creditor of an entity in business since yesterday (e.g. one of the dime a dozen LLCs with names that seem to be originate while contemplating the drive through menu at Taco Bell (e.g. ItsNachos LLC).
Taking a promissory note from the structured settlement payment buyer is a shuffling of creditors to put more risk on the seller