by Structured Settlement Watchdog
Selling your structured settlement payments is always a losing money proposition
Each time you sell a portion of a payment stream you are effectively giving your self a demotion and slicing your pay
In this blog John Darer reviews some really contorted statements about structured settlement factoring in a piece authored by Mia Taylor and edited by Hannah Smith, for Bankrate.com and Yahoo Finance, and delivers a punchline grade riposte below.
1. “Settlement Fund”–A Basic Misunderstanding
1.“When contacting a buyer like J.G. Wentworth, a company representative will review your settlement fund, the amount of your monthly payments and current financial needs and offer two or three different buyout options”.
- A fund is a lump sum by definition — there is nothing to “factor.”
- Present value of a cash sum is not a mystery; it’s finance kindergarten.
- Claiming a buyer “reviews your settlement fund” signals a basic misunderstanding of structured settlements.
2. Misstating Judicial Review Timelines
2.”When reviewing the sale, a judge will typically consider your living expenses, life expectancy, and future financial needs. This process can take anywhere from 45 to 60 days”.
- Judges do not spend 45–60 days “reviewing” a transfer petition.
- The timeline reflects scheduling, notice, and statutory waiting periods — not judicial contemplation.
- Misstating this process misleads consumers about how transfers actually move through the court.
3. Discount Rates Treated Like Negotiable Fees
3.“If the cash settlement company moves forward, they will offer the payee an upfront sum to surrender the payment stream along with a discount rate,” says Sexton. ‘The discount rate ranges between six percent and 29 percent.”You can negotiate the specific rate, but they are not take-it-or-leave-it offers, Sexon (sic) adds”.
“Discount rate ranges between 6% and 29%… you can negotiate it,” says Sexon (sic)
- The quote treats a discount rate like a negotiable service fee, which is not how present value works in any finance classroom on Earth.
- The misspelling — “Sexon” — unintentionally upgrades him to an Anglo‑Sexon, which is at least historically interesting, if not financially relevant.
- The cited expert also carries an SEC injunction history, which makes the reliance on his guidance even more questionable.
Firm Tied to Woodbridge Ponzi Scheme Settles With SEC | ThinkAdvisor
“Without admitting or denying the allegations of the complaint, Sexton and Sexton Advisory agreed to permanent injunctions against violating the charged provisions, the SEC said”. September 2020
4. The “Structured Cash Settlement” Oxymoron
4. Structured cash settlements provide a steady and reliable stream of cash often over several years or even for the remainder of your life. What’s more, having the money distributed in increments, rather than cashing out, protects you from making big splurge purchases or using the money up quickly.
“Structured cash settlements provide a steady and reliable stream of cash…”
This collapses the distinction between a lump‑sum cash settlement and a structured settlement annuity, confusing readers about what they actually have.
- A “structured cash settlement” is an oxymoron — if it’s structured, it’s not cash; if it’s cash, it’s not structured.
- This phrasing collapses the distinction between a lump‑sum cash settlement and a structured settlement annuity, misleading readers about what they actually have.
- When a writer can’t keep the basic taxonomy straight, everything built on top of it wobbles.
5. Aiming at $500,000 and Hitting the Crossbar
“Some structured settlement companies charge 25 percent to 50 percent of the payment amount to be received,” said Michael Sullivan a personal financial consultant with Take Charge America. “That means getting the rest of $500,000 remaining in an annuity might result in a loss of $125,000 to $250,000.”
- When the subject matter is this basic, the writing exposes the crap instantly — the only gap with any dignity is an anion gap; everything else is onion gap, and it stinks.
- Some people take a full wind‑up from the goal line and still manage to hit the crossbar — a metabolic disturbance of thought that makes missing the obvious look like a skill.
- No bona fides means no aim — the sentence leaves the foot already drifting toward structural failure.
6. Present Value Misfires and Discount Rate Reality
6.In discussing losing money as a disadvantage of cashing in your structured settlement, someone doesn’t articulate present value very well. I used the calculator at Structuredsettlement.co to approximate the all in discount rate for $500,000 paid in monthly payments over 10 years that would raise $250,000 today and it was about 17.07%. Download Structured Settlement Calculator solve for discount rate 250K PV of 500k future monthly payments over 10 years
7. Punchline: Pennies on the Dollar Explained
7.Settlement buyers pay a discount rate for your monthly settlement payments. This means you won’t pocket as much money through a cash-out plan as you would have through receiving the payments over time as scheduled.
Punchline: Where you arrive at “pennies on the dollar” because “buyers pay (you) a discount rate” instead of discounting your cash flows
8. The Credility Gap Behind the Article Being Reviewed
How does an award winning writer not cite one person who is member of the board of the National Association of Settlement Purchasers, or even someone with years of experience in structured settlement transfers, structured settlement investments and/or bona fides on the subject matter?
My interest as Structured Settlement Watchdog is to ensure that consumers seeking information about any aspect of structured settlements have the clearest path to accurate, experience‑grounded information.
Mia Taylor is highlighted as an award‑winning finance and travel journalist with 20 years of experience. That may be. But “What to Know About Cashing Out Your Structured Settlement” shows no relevant experience or adequate research.
Contradictory discount rates expose a lack of understanding of present value and discounting — Finance 101. The internet is full of articles like Taylor’s: over‑SEO’d, under‑researched, and written by individuals with no structured settlement bona fides.
And what about the reviewer? Did the reviewer examine the facts, or just the spelling and sentence structure?
Last updated August 10, 2024