In 2000, the National Structured Settlements Trade Association and National Association of Settlement Purchasers agreed on language that was designed to protect the consumer when selling their structured settlement payments for cash. This language is referred to as the “Structured Settlement Protection Act” and 47 states have adopted laws that are closely aligned with the model statutory language.

The District of Columbia, New Hampshire, Vermont, and Wisconsin are the only 4 jurisdictions that have not enacted their own Structured Settlement Protection Acts.

Annuitants (sellers) who live in the District of Columbia, New Hampshire, Vermont, or Wisconsin could reasonably be worried that if their state has no structured settlement protection act, they would not be able to sell any of their structured settlement payments. However, the good news is that they are able to sell and transfer their structured settlement payment rights under the Structured Settlement Protection Act of the State in which the insurance company who makes the payment is located.

The federal law governing the transfer of structured settlement payments, Internal Revenue Code Section 5891, requires that every transfer of structured settlement payment rights must be approved by a court order. And the same law legislates where the court order must be obtained: in general, IRC Section 5891 requires that the court order be obtained in a court in the state where the annuitant lives in accordance with the state’s Structured Settlement Protection Act. However, if there is no Structured Settlement Protection Act in the state where the annuitant lives, then the court order can be obtained in the state where the insurance company is located, in accordance with the Structured Settlement Protection Act in that particular state.

So, if any structured settlement annuitant is currently living in the D.C., New Hampshire, Vermont, or Wisconsin, they don’t need to worry about not being able to sell their structured settlement payments for a cash lump sum. All they have to do is to contact Strategic Capital and we will obtain the court order from the court in the state where their insurance company is located. Please call us should you have any questions or inquiries about any selling your structured settlement payments and the process involved – 1-866-256-0088

Budget cutbacks:

In 2009, the United States confronted the most severe economic downturn since the Great Depression. As a result, most states face budget gaps of unprecedented proportions. In 2010, California made difficult but necessary decisions to close a $60 billion budget deficit in order to prevent a major fiscal crisis. California has had to adopt reforms in every area of government to contain costs. One of the significant state general fund adjustments was the reduction to trial courts operations for a total of $100 million in reductions.

Backlogs:

As a result, these budget cutbacks have had a negative impact on timing of court hearing dates. Courts in various counties have resorted to a range of cost cutting measures, for instance, mandatory court closures, leave of absence days without pay, staff reductions and increased workloads. Consequently, court rooms are backlogged, and the number of cases that need to be processed per day has increased drastically. The Backlog affects all court hearings, including hearings for structured settlement transfers.

Hearing dates once the documents have been filed and processed:

In the past, one could simply request a date for a hearing and the court would assign the date requested. However, ever since the budget cutbacks, hearing dates have become a matter of “when” the first available date is. In some counties, like Los Angeles, the first available date could be up to 90 days away.

Filing and Processing of documents:

Prior to the 2010 budget cutbacks, the average turnaround time for document filing, processing and assigning of hearing dates, was between 7 to 10 business days. Currently, though, as a result of staff reductions, and varying from county to county, it may take anywhere from 4 weeks to 3 months to even obtain a court date. These times vary from county to county because certain counties have greater budget than others.

California is not alone. State courts across the country are struggling to deal with the consequences of the Great Recession.

Hopefully in 2011, there will be new effective solutions for the backlogged court system.