Following up on an in-depth article about structured settlement factoring practices in Virginia, the Washington Post today said that the issue has gotten the attention of state lawmakers who intend to strengthen the state’s structured settlement protection act.
The Post said that members of the Virginia legislature are considering legislative changes, because the Virginia SSPA “isn’t working the way it should to catch ‘bad actors.” One lawmaker was quoted as saying, “Obviously the current system’s not working”.
The Virginia SSPA is one of forty-nine state structured settlement protection acts. (Every state except New Hampshire has such a statute.) These statutes provide that, if a person is entitled to receive structured settlement payments in the future and is interested in selling those future payments in exchange for an immediate, but often highly discounted, lump sum, then the transaction must go before a judge, who is to decide whether it is in the payee’s best interest. In addition to the requirement for judicial oversight, SSPAs provide that the payee must receive pre-transaction disclosures from the transferee (or “factoring company”), and are entitled to other protections.
Under most state SSPAs, judicial proceedings are to take place in the home county of the payee. But in Virginia, the SSPA has no such requirement. The Washington Post’s article on questionable factoring company practices indicated that one judicial district, in Portsmouth, Virginia, was the “clearinghouse” for factoring transactions in the state, as the rate of judicial approval of transfer may have been higher there.
According to today’s Post article, a bill introduce in the Virginia legislature “would require cases to be filed and heard in the jurisdiction where the seller [or payee] lives and require the seller to appear in person at the hearing.”
The full article, “In Richmond, calls to reform purchases of structured settlements”, is available here.