A New York trial court earlier this year rejected a proposed transfer of structured settlement payment rights as “unconscionable”, since it would involve an exchange of payments “with a present value of $135,010.00 for a sum of only $10,000.00”.
In the Matter of the Petition of J.G. Wentworth Originations, LLC (Sanders), Index No. 001145, Supreme Court, Suffolk County, N.Y. (N.Y. Sup. Ct. May 21, 2018), involved a proposed transfer of structured settlement payment rights by payee Frank Sanders.
The court pointed out that the New York Structured Settlement Protection Act “requires judicial approval before a plaintiff can sell their rights to future structured settlement payments to a third party” and is “designed to protect recipients of long-term structured settlements acquire their guaranteed from being exploited structured settlement and deceived by companies assertively seeking to acquire their guaranteed structured settlement payments.”
The New York SSPA states that the court must make the certain findings beforea transfer can be effectuated, including, (a) that the transfer complies with the SSPA’s requirements, (b) that transfer is in the best interest of the payee, taking into account the welfare and support of the payee’s dependents, and that the transfer is “fair and reasonable”.
The court said that the proposed transfer involved future structured settlement payments with a face value of $223,413.60, and a discounted present value of $135,010.00 – but, under the terms of the proposed transfer, the factoring company would pay the payee only $10,000.00 in exchange for those future payments.
Said the court: “After consideration of all of the foregoing factors, the Court is unable to find that the proposed transaction is either or ‘fair and reasonable.'”
The court also said that “[s]urrendering a guaranteed future payment of $223,413.60 with a present value of $135,010.00 in exchange for a heavily discounted lump sum of $10,000.00 under the circumstances presented would not be in the best interest of Frank Sanders.”
The opinion is available here.