Author Topic: Buyout of structured settlement?  (Read 2096 times)

Cowardly Toaster

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Buyout of structured settlement?
« on: January 24, 2018, 03:01:15 PM »
I'm currently involved in a class action lawsuit against a former employer for unpaid wages.

I have no idea how this will all shake out, or if there will even be any considerable sum left over for the workers after the lawyers take their cut. However...

If I end up with some sort of structured settlement on any sizable about of money, say $10,000, are those companies that will buy out your settlement a good deal in any sense?

Sibley

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Re: Buyout of structured settlement?
« Reply #1 on: January 24, 2018, 03:20:32 PM »
I suspect that the structured buyouts a bit of ripoff, but it would depend on fees, etc. It feels somewhat similar to the paycheck advance companies, and those are a ripoff. Other than impatience, would you need the money in a hurry?

And, don't count your chickens before they hatch. The case hasn't even come to a conclusion yet, much less figured out what everyone will get paid.

sokoloff

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Re: Buyout of structured settlement?
« Reply #2 on: January 24, 2018, 05:46:15 PM »
Those companies make enough money (which comes from the surplus they take over the fair value of the structured settlement) to run TV ads.

Granted, late night (fairly inexpensive) TV ads, but still: enough money left over to pay the salaries of people that work there and television ads.

That's more than enough for me to conclude that they aren't a good deal for the sellers of their settlements.

Laura33

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Re: Buyout of structured settlement?
« Reply #3 on: January 25, 2018, 09:38:57 AM »
I think you can figure that out yourself if and when the time comes, right?  Presumably, they will tell you that the award is, say, $10K, payable at $1K/yr over 10 years.  OK.  Pull up a present-value calculator and figure out what the present value of $10K is.  Then get a quote from a structured settlement company.  Pretty sure the quote will be noticeably lower.  But then again, if it's just a small amount, you might decide it's worth it just to not have to deal with the hassle and have those funds to invest yourself.

Full disclosure:  I detest those places, which IMO operate at the level of pond scum.  Yes, many settlements are structured so that they cost the company less.  But many are structured for the protection of the plaintiff who is settling to make sure he is taken care of in the future -- e.g., where the plaintiff has been permanently injured/disabled in an accident, you want a structured settlement to make sure he has money coming in every year for the rest of his life to cover his medical costs.  But these companies swoop in and offer what looks like a huge chunk of money up front, buy out the settlement, and then the injured guy (or, more likely, his family/caretakers) blow through the windfall, and he ends up not being able to afford the very medical care the settlement was designed to provide.

Obviously that is not your situation; I would expect anyone here to deploy any kind of lump-sum payment wisely.  So, again, if you do the math and decide it's worth it, go for it.  But the point is more that these companies are used to dealing with people who don't even know how to do the math (and so have no way to determine whether the deal is good or bad).  As a result, I would expect the fees and discount rates to be very heavily inflated to take advantage of the ignorance of their typical customer. 

 

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