Hwang Lawfirm

It’s no secret that in America today consumers have come to doubt the ethical standard by which Wall Street and financial institutions abide.  Certainly the events beginning in 2008 have caused many to question the effectiveness of the rules and regulations governing many financial products.  While very few individuals such as Bernie Madoff have gone to prison in order to serve as token examples for an increasingly enraged citizenry, the fact is that when it comes to engaging in virtually any type of financial transaction involving large sums of money, you need to protect yourself.

Despite deregulation of financial services over the past thirty years and limited enforcement of existing laws, you’ll be happy to know that when it comes to factoring companies – that is to say, structured settlement buyers – there are substantial legal protections still in place for sellers.

The Structured Settlement Protection Act of 2002 is federal legislation that mandates a number of safeguards for recipients seeking to liquidate all or a portion of their future payments in order to maintain the favorable tax treatment of personal injury settlements. The main protection is the requirement that all structured settlement transactions conducted by a factoring company be reviewed and approved by a court of law before they are allowed to go through.  It also requires full disclosure of all terms up front as well as a “cooling off” period during which a seller may withdraw from the transaction.

The best way to protect yourself, however, is to trust your instincts and do your due diligence. Check the Better Business Bureau and read up on the company’s profile. Virtually every business currently operating receives a few complaints; however, if there is an unusually high number of these complaints and many of them are listed as “unresolved,” it should serve as a warning. You will also want to make certain that the factoring company with which you are doing business is licensed, bonded and insured (where applicable) to ensure the company you are dealing with is likely to be around for the long term.

Take time to look into the company’s relationships with insurance companies and litigation firms as well as its former clients. Strong, positive relationships are a good indicator that the company is operating in an honest and ethical manner.

If the structured settlement buyer with which you are doing business employs high-pressure tactics and is circumspect about the terms of the deal – or makes unrealistic promises (such as a guarantee that you will receive your check in an unreasonably short period of time), chance are that it’s time to seek another buyer.

You should also take nothing for granted: read all documents with which you are presented, and have your own attorney review them if you find them difficult to understand.

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