Buyer Beware: Factoring Companies Use Creative Techniques to Lure Unwary Investors
A Wall Street Journal article recently shed light on a relatively new way factoring companies are earning income from structured settlement annuities. In settlements involving personal injuries and some non-personal injuries, the injured party often agrees to an annuity that pays out settlement funds over time instead of in a single lump sum. The annuity income is tax-free. In addition, structured settlements enable injured parties to better plan their financial future. However, when an unforeseen financial emergency arises and money is needed fast, injured parties can sell their annuities for cash to factoring companies at deeply discounted rates.
