Search for a loan against a structured settlement and you will find firms that answer. Read the paperwork and most of them are proposing to buy your payments, because a true loan secured on settlement payments runs into the same anti-assignment clauses and the same statutes that govern a sale. The distinction matters, because a sale is permanent and a loan is not.
Why a true loan is rare here
A lender taking security over your payments would be taking an interest in the very rights the settlement agreement usually says cannot be assigned or encumbered, and it would still need the obligor and issuer to redirect payments, which they will not do without a court order. So what is offered instead is a purchase of specific payments dressed in the language of a loan. Read the document for the words transfer, transferee and payment rights: if they are there, it is a sale.
How to tell which one you are being offered
A sale ends with a court hearing and a final order; a loan does not. If the firm is preparing a court application, notifying your annuity issuer and asking whether you have had independent professional advice, you are selling payments. Texas requires the court to find that the payee has been advised in writing by the transferee to seek independent professional advice and has either received it or knowingly waived it in writing, so that question is a reliable tell.
What a Texas court has to find
Texas puts the requirement in the form of an effectiveness rule rather than a penalty. No direct or indirect transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee unless the transfer has been approved in advance in a final court order based on express findings by the court. Those findings include the best interest of the payee, taking into account the welfare and support of the payee's dependents, and that the payee was advised in writing to seek independent professional advice.
Questions people ask about structured settlement loan
Does a court really have to approve this?
Yes, in every state. The federal exception in 26 U.S.C. 5891(b) applies only where the transfer was approved in advance in a qualified order finding it is in the best interest of the payee, taking into account the welfare and support of the payee's dependents.
What is the single biggest variable in the price?
The discount rate, and after that how far in the future the payments fall due. The reported range across the market is between 9% and 18%.
Do you take a share of what I get?
No. Buyers pay a flat fee for the enquiry itself, never a share of the discount and never anything contingent on a transfer completing.