The Structured Settlement Protection Act
In 2002 an act was created to protect people who were awarded a structured settlement. Basically, the act states that anyone wanting to sell a structured settlement has to go before the state court to be approved. Essentially the transaction has to be approved and signed off by a judge. Some states require you attend the court hearing and some states don’t.
After the act became in affect it was implemented that the insurance company who issued the structured settlement would also be notified of the transfer of payments before the judge signs off the transfer. Whoever is selling the structured settlement must acquire an attorney as well. If you are selling your settlement is best to go through a factoring company to take care of all documents and court cost which is usually included in your quote.
Under this act it is also a requirement to follow a legal proceeding, beginning with the acknowledgement of the disclosure, contract signing after the state requirement waiting period, and court hearing (some stated don’t require you to be present). It is crucial for a factoring company to go over all possible options regarding your payment stream. It is best to go with a company that has your best interest in mind.
Some states also require a person to get and IPA letter, which means independent professional advice. This is only in the best interest of the person selling the structured settlement. It should always be stated by the factoring company in the disclosure and contract that it is in your best interest to get independent professional advice whether the state requires it or not.