Denial of Sturcutred Settlement Transfers by Courts Due To Objections of Annuity Issuer

by Marry A. S.

While structured settlement transfers are indeed easily approved by judges in most cases, especially with participation and appearance of the payee before the judge and with a reasonable discount rate, it does happen here and there that a judge refuses to approve a sale of structured settlement future payments.

And one reason to this is because of Anti Assignment provisions included in the original contract of the structured settlement, especially when the original obligor and issuer objects to the transfer.

Cases like this did happen, and court decisions in such instances depend on many things, including the federal and state law, the specific circumstances and the judges own reasoning.

Once such instance was when a structured settlement holder wanted to transfer to e settlement and get a lump sum. In 2005, the obligor and annuity issuer filed a petition against it and the trial court denied the transfer.

It is definitely worth paying attention, both at the time of signing the original structured settlement, as well as when considering a structured settlement transfer, to the exact language and details of the contract that can range from rather simple to quite embellished, complicated and hard to understand.

Does the agreement negate an assignment of the contract, or of the future payments? In the latter, the odds for a enforceability of the anti assignment restrictions and court denial of the transfer are higher.

In the a.m. case, the Appeal Court of the Florida State upheld the trial court ruling denying the structured settlement transfer that the appeal court found "valid and enforceable" due to an anti-assignment provision, contravention of the the structured settlement by the transfer and objection of an interested party to the assignment of future payments.

There were also a number of other cases of structured settlements transfers not gaining court approval, but each and every case is really unique and it depends on the agreements, laws and circumstances.

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Oct 31, 2015
by: Anonymous

In regard to your input about the denial of a structured settlement payment transfer by an Illinois judge, just so that you are aware, these legal issues are so complex that it is necessary to take help from an attorney or a lawyer. There's much to say from a legal point of view on such subjects.

Just recently, the Illinois courts got even more strict on the practices of transferring structured settlement payments, giving more weight to the requirement of transfer to be in the best interest of the seller and his/her dependents, as is imperative according to the Structured Settlement Protection Acts but are frequently sidestepped by factoring companies, their attorneys and court houses.

Jul 29, 2015
The Illinois Anti Assignment Enforcement Effect
by: Anonymous

And what about the Illinois judges who have denied structured settlement transfers because of anti assignment when it would in other states be approved. It turned the industry upside down and caused instability and insecurity in the market. After all, who would venture buying a structured settlement second hand, or invest in such, when you can't be sure if it has solid legal ground, and then comes a judge and dismisses the validity of the transfer.

Consider the confusion, frustration and financial damage involved in the while string, starting from the originator buying out the settlement streams, then the next buyer or investor, the costs involved in the transaction, the legal considerations of everything. The annuity would go back to the original payee who may have already spent out the lump sum.

Think about the shares, the security products of investors, and all the rest, and so on and so forth. I mean, it is serious trouble being called for and a disaster waiting to happen. No wonders, it shattered the markets and shares of public factoring companies fell drastically without any prognosis, I think, of rehabilitation.

The risk of this being replicated in other states, I think, is lingering on to the point that major players, stakeholders and bloggers are expressing uncertainty and worry about the whole future of the secondary market that has flourished in recent years. Time will tell what this anti assignment enforcement will do the future of the structured settlement factoring industry.

Jul 24, 2014
Virginia Court Banned Structured Settlement Transfer in 2011
by: Anonymous

There was also a case of a workers' compensation granted for a worker by federal law. A structured settlement was arranged. Later the claimant wanted to transfer the payments, but it was banned by court from doing so because of a non-assignment clause in the structured settlement agreement. The judge in his ruling stated that the Federal law prohibits the transfer and that it is forbidden by the Virginia Act. The claim in that case was about a personal injury working for a ship company. The ship company's insurer in charge of the compensation objected to the transfer and the Virginia court accepted that objection, especially when the whole claim was made under federal law.

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