Sell Structured Settlement The Selling Process 2

Question 1

What does 'partial sale' mean in the context of structured settlements?

Accepted Answer

Selling only some of the payments rather than the entire stream

Answer

A partial sale allows the payee to sell a portion of their future payments — for example, payments for the next five years — while retaining the remaining payments.

Question 2

Which type of structured settlement payments CANNOT typically be sold or transferred?

Accepted Answer

Workers' compensation settlement payments in most states

Answer

Workers' compensation structured settlement payments are generally exempt from transfer laws and cannot be sold in most US states.

Question 3

After a payee signs a purchase agreement, most Structured Settlement Protection Acts require a mandatory waiting period before the court hearing. How long is this typically?

Accepted Answer

At least 3 business days to receive disclosure, then varies by state

Answer

Most SSPAs require that the payee receive written disclosure of key terms at least 3 business days before signing, with additional waiting periods varying by state law.

Question 4

What information must be disclosed to the payee under most state Structured Settlement Protection Acts before a transfer can proceed?

Accepted Answer

The discount rate, fees, net payment amount, and total value of payments being sold

Answer

SSPAs require factoring companies to disclose the discount rate, all fees and expenses, the net lump sum the payee will receive, and the total dollar amount of payments being transferred.

Question 5

What happens if a factoring company fails to comply with IRC Section 5891 when purchasing structured settlement payments?

Accepted Answer

A 40% excise tax is imposed on the factoring company

Answer

IRC Section 5891 imposes a 40% excise tax on the factoring company if the transfer does not receive a qualifying court order approving it.

Sell Structured Settlement Practice Test

Sell Structured Settlement Practice Test

Sell Structured Settlement The Selling Process 2