The simple answer is yes a judge must approve your transaction to sell your structured settlement based upon the structured settlement protection act that went into place around 2002. This statute was designed to protect you with a series of safeguards including disclosures, waiting periods and finally judge approval.
Why can’t I get cash from my structured settlement as easy as I can get a credit card?
It does seem strange that you get credit card offers filling up your mailbox each month with pre-approved displayed on the front of the envelope yet no one is telling you whether you can sign the application. For that mater most people have three or four cards in their wallet with huge limits with little or no oversight. So then why do you have to go see a judge to approve your structured settlement transaction and jump through so many hoops to get your structured settlement cash early? This is a good question and one that many are asking who have structured settlement payments, but need cash for a car, home, pay bills or many other important reasons.
The simple answer is to protect you. Which means ensuring that you are receiving all the information about the transaction clearly without anything being hidden from you.
First – The statute requires a disclosure statement to be sent to you first, before signing a contract. The disclosure statement shows you the payments that you agreed to sell, the amount that we agreed to pay you and if any costs are applicable to your deal. In our case, we do not charge costs. The disclosure should also recommend that you seek independent professional advise, before completing your transaction. In most states, it is not a requirement to get independent professional advise, however it is recommended to help ensure you receive a good deal and that your financial future is secure also.
Second – The statute requires a mandatory waiting period between the time you receive a disclosure and the time you can enter into a contract. This waiting period is designed to make sure you have enough time to review the disclosure and get any questions answered before being obligated under a contract, or what the industry terms a transfer agreement. This waiting period helps to ensure you are not feeling pressured into signing a contract that you are not comfortable with signing.
Third – The statute requires that you receive approval of your structured settlement transaction from a judge in your area. The judge will review the transaction and approve it based upon the following criteria.
- Is the transaction in your best interest. This was a standard used for years to determine the best interest of children and other incompetent people, but was adopted for these transactions. The statute is not suggesting that people who are selling their structured settlements are like children or are incompetent, however it gives the judge an oversight to ensure a good transaction. What best interest means for you to sell your payments is different for each judge, however generally speaking the judge wants to know you are using the money for reasons that will enhance your life such as paying off debt, buying a house, getting education etc. Most transaction that are based upon reasons like vacation, fancy cars, gifts etc will not be approved by a judge.
- The judge wants to know that you know what you are selling and what you are receiving. This seems simple, however the documents that one is required to sign are lengthy and can be confusing. Mainstreet Funding will go through the documents in great detail to ensure you are completely comfortable with the agreements, however the judge also wants to ensure the you are comfortable.
- Will the transaction have an effect on other people or children related to the one selling the payments. For example, if a parent sells the payments, then will the parents have the means to pay for food for the children in the future. If the judge believes the children will be adversely effected then the judge will deny the transaction.
There are other reasons that judges look at before making a decision, however these are the ones you see if most of the cases.
We, at Mainstreet Funding, believe this statute was a great addition to our industry because it promotes authentic and ethical business. We believe each person that sells their payments should receive a great deal, be fully educated on their decision and do so in a no pressure friendly environment. To learn more, please contact one of our friendly and knowledgeable structured settlement or annuity specialists today at 1-877-919-8003.