Rescue Capital Blog Your Money, Your Way

25Jun/12Off

Judge rules against Sovereign Funding

Posted by Dawn Anderson

Rescue Capital can help with structured settlementsAccording to published reports, Judge Marvin J. Garbis ruled against David Springer and Sovereign Funding Group’s motion for summary judgment in favor of plaintiff Woodbridge Structured Funding, LLC. (Woodbridge Structured Funding, LLC v Sovereign Funding et al. Civil action No. MJG-11-3421)1

The judge issued a scheduling order requiring all fact discovery be completed by December 31, 2012. Woodbridge’s complaint states that the defendants allegedly utilize unfair competitive practices including trademark infringement, false advertising, libel, defamation and product disparagement.

Previously, structured settlement factoring company and competitor J.G. Wentworth filed a similar lawsuit against Springer and Sovereign Funding accusing the Maryland based company of comparable allegations as the Woodbridge lawsuit. That lawsuit was settled in March 2012.

In February 2012, it was reported that several other companies/individuals were also victims of the alleged SEO tactics of Sovereign Funding and/or its SEO vendors including MetLife, Pacific Life and industry blogger John Darer.

Source:

1. http://structuredsettlements.typepad.com/structured_settlements_4r/2012/06/maryland-judge-rules-discovery-can-proceed-against-david-springer-and-sovereign-funding.html



21Jun/12Off

Bad credit not relevant with structured settlements

Posted by Dawn Anderson

When you’re suffering financially, waiting for payouts from a structured settlement annuity isn’t the most convenient way to get bad credit ok at Rescue Capitalmoney.  Clearly it would help if you can have access to your money sooner perhaps in a lump sum payment. Maybe you thought about looking into it before but delayed calling because you have bad credit and were afraid you wouldn’t be approved. The good news is that selling your future payments allows you to get the cash you need without borrowing money. It is not a loan it is a transfer of the legal rights to your future payments. So there is no money to pay back or credit approval.

The only way to improve your credit is to pay off your debt and selling your structured settlement could be the key to financial stability. Use the cash lump sum to pay off your credit cards or avoid foreclosure and invest the remaining funds to start earning interest for you. It is time to take control of your finances and reap the benefits of your money.

Working with Rescue Capital to sell your structured settlement for a lump sum has some benefits too. We can custom tailor the package to suit to your needs and goals. They can help you develop a plan to pay off your debts and work with your creditors to pay off the debts immediately. We’re also here to answer your questions without delay. Remember, the money is legally your property so why not use it to suit your needs.

You don’t have to sell you entire settlement. You can sell only part of your settlement, keeping some of your scheduled payments and have an influx of cash for your immediate needs. Cashing out your structured settlements can give you more financial freedom which is something everyone can use.

Don’t delay getting the facts about your financial situation. Call Rescue Capital today to discuss your situation and make your structured settlement to work for you. Call 866.688.3532 for your free no-obligation quote.



13Jun/12Off

Payday loans: Unfortunate trap or necessary evil

Posted by Dawn Anderson

Rescue Capital can save for having to rely on payday loansOnce again payday loans are a trending news topic. Just in the past five days, Pennsylvania and Delaware have introduced legislation to regulate the practice while payday loans from banks are now part of a FDIC probe. Two tribal nations in Oklahoma were cited in a FTC complaint and payday loan lead generation website MoneyMutual.com has also come into fire for its auctioning practices. While some groups and individuals feel that there is a need for these types of businesses, there is a need to protect consumers from themselves as well as predatory, deceptive or fraudulent lenders.

Pennsylvania

The PA house voted to approve an industry backed bill to regulate short-term lending. The bill, which hasn’t been approved by the PA State Senate, would require short-term lenders to obtain state licenses and limit borrowers to a 25% max of their gross monthly income or $1,000, whichever is less. Lenders could charge only 12.5% interest plus a $5 fee for each loan. For example, a $300 loan would cost $42.50 if it was repaid at the end of two weeks. However, consumer groups argue that the interest and fees would equal to 369% when calculated as an APR. PA currently has a maximum APR of 24% that can be charged by licensed lenders. [i]

One short-term lender stated that a 24% APR on a $100 loan is not economically feasible because only $.92 cents would be generated by the end of 2 weeks. If one person defaults, it requires 108 successful loans to recover the lost principal.[ii]

Delaware

State lawmakers in Delaware have taken a different approach. Under House Bill 289, borrowers would be limited to 5 payday loans in any 12 month period including loan rollovers and refinancing. In addition, they could only borrow $1,000 or less and the state would establish a database to track the number of loans a person has taken. The Bill was established in order to prevent the number of defaults within the state. Currently there are 70 licenses lenders with approximately 200 locations throughout the state. The bill is waiting for the signature of Gov. Jack Markell.[iii]

Detractors of both bills believe that these restrictions will force individuals to go out of state or online where there are fewer restrictions. Currently 13 states prohibit payday loans, while another 21 state prohibit rollovers. Only 13 states have statewide databases that track these short-term loans.[iv]

Bank Payday Loans

In response to a February petition signed by consumer rights advocates, the FDIC announced it will investigate payday loans from banks. According to the petition, several banks including Wells Fargo were called out for their lending practices. In addition, the petition cites Fiserv’s lending software, which promises to increase fee income, as a contributor to the problem.

Oklahoma

The Federal Trade Commission (FTC) complaint states that two American Indian tribes in Oklahoma are allegedly operation payday loan companies that add hidden fees, violate lending laws and threaten customers will false arrest for defaulting. In the complaint, the tribes are citing tribal immunity but the FTC states that tribal affiliation does not exempt them from federal law, in this case the Truth in Lending Act.  On a $300 loan borrowers were told they would pay $90 in interest. But the lender automatically renewed the loan at the end of two weeks resulting in fees of $975. The FTC stated that they have received 7,500 complaints about the defendants over the past 5 years.[v]

MoneyMutual.com

You may have seen their commercials on TV featuring former talk show host Montel Williams as their pitchman, but Money Mutual isn’t actually a lender. They are a lead generation website that auctions off prospects’ information to the highest bidder. Sometimes it is a legitimate lender but other times it could be a fraudster who has enough information to make unauthorized withdrawals from unsuspecting consumers’ accounts. While the company claims to take “extraordinary” steps to protect their information, others might disagree. The Director of the Consumer Financial Protection Bureau is reviewing how the sites treat data and the FTC has received numerous consumer complaints about the firm.[vi]

The parent company of Money Mutual doesn’t believe that government regulation of the industry is necessary because the industry is policing itself. Consumer advocates believe that it is a huge risk to consumers. In one case, information collected by an unnamed lead generation website was used by call centers in India to badger consumers into paying debts they didn’t owe.[vii]

Thoughts and considerations

Payday loans are a tricky business. Some individuals believe that people without access to traditional forms of credit have a legitimate need for these services. Consumer advocates believe these types of products prey on the poor and cause them to become deeper in debt. The industry believes it doesn’t need government regulation but at the same time current regulation has caused individuals to seek riskier internet based alternatives. So in those instances is the regulation really helping?

One of the biggest issues is the lack of authority over the tribal nations; the government needs to get that issue under control. But there needs to be a balance. Obviously states will have a hard time finding legitimate lenders if the interest rate caps are so low that the lenders won’t make money. Consumers need access to cash in a hurry but they also need to some sort of regulation that will prevent them from financial disaster. While it is difficult to regulate the Internet, there needs to be a way of protecting users from fraud and harassment.

If you look at other industries such as structured settlement factoring, government regulation has helped the consumer. While not logistically possible for payday loans, each structured settlement factoring transaction requires court approval to determine if the sale is in the best interest of the seller. Perhaps a nationwide database used by lenders to limit the number of transactions an individual could take in a 12-month period we could prevent some issues. A cap in the loan amount could also help. There also needs to be uniform laws nationwide regarding this type of lending that applies to online as well as offline lenders.

Sources:

[i] http://www.cbsnews.com/8301-505245_162-57448930/pa-house-approves-payday-lending-bill/

[ii] http://www.cbsnews.com/8301-505245_162-57448930/pa-house-approves-payday-lending-bill/

[iii] http://www.newsworks.org/index.php?option=com_flexicontent&view=items&id=39697:delaware-payday-loan-bill-heads-to-governors-desk

[iv] http://www.newsworks.org/index.php?option=com_flexicontent&view=items&id=39697:delaware-payday-loan-bill-heads-to-governors-desk

[v] http://www.loansafe.org/two-oklahoma-tribes-payday-loan-operations-cited-in-ftc-complaint

[vi] http://www.businessweek.com/news/2012-06-08/data-from-payday-loan-applicants-sold-in-online-auctions#p2

[vii] http://www.businessweek.com/news/2012-06-08/data-from-payday-loan-applicants-sold-in-online-auctions#p2

 



8May/12Off

1,500 ELNY short fall victims under pressure to accept payment cuts rather than appeal

Posted by Dawn Anderson

When an injured party is the recipient of a court-awarded compensation it is often encouraged by everyone involved for the party to receive their settlement in the form of periodic payments through a tax-free income stream. The intention is to ensure that the injured party does not prematurely exhaust their settlement funds and have guaranteed income for a specific time period. [2]

As previously reported, Nassau County Supreme Court Justice John Galasso approved a plan to liquidate Executive Life Insurance Company of New York (ELNY) resulting in major losses in benefits for many personal injury victims. [2]
Obviously this causes a great financial burden to those victims who rely on the money in order to support themselves as well as their families. As you can imagine there are many people who disagree with the outcome, specifically the 1,500 annuitants who will be receiving cuts in their payments as a result of the approved liquidation. In some cases these cuts are more than 50%. [1]

According to structured settlement industry expert, Patrick Hindert, the life insurance industry is voluntarily establishing a $100 million “Hardship Fund” to assist those people who are affected the most by the liquidation. This amount only represents 10% of the actual shortfall. [3]

Hindert, quoting several passages from documents sent to shortfall victims, has implied that any appeal and subsequent rejection of Judge Galasso’s order will cancel the conditions for establishing the fund. As a result no payments will be made available to the shortfall victims. [3]

Many individuals are worried by the perceived attempt to strong arm annuitants into accepting the deal rather than appealing the terms of liquidation order. [3]

Speaking for the ELNY structured settlement shortfall victims he represents, attorney Edward Stone states, "These statements represent another strong arm tactic to try to prevent ELNY shortfall victims from pursuing their constitutional rights." [3]

Some victims who chose to remain anonymous believed it would have been more fair if the loss would have been distributed equally among all annuitants rather than single out the 1,500.[3]

One industry expert had a different take stating, “Annuitants received 100% of what was a grossly unreasonable annuity amount.” [5] Implying incompetent regulators who allowed the sales to happen, the poor pricing of annuities as well as the annuitants’ willingness to put all their “eggs in one basket” were part of the reason ELNY failed while others prevailed. [5] This individual suggests that ELNY victims, many of whom were minors at the time, should examine all the facts around their cases, sales literature, correspondence and financial comparison to determine if their parents, lawyers etc were at fault for buying the ELNY annuities in the first place. [5]

Since the 1970’s, life insurers have paid benefits worth approximately $100 billion, according to industry experts.[1] Structured Settlement annuities have been a major source of profits for many life insurance companies including some that are currently experiencing losses. [4] Therefore it comes as a shock to discover that the insurance companies aren’t willing to do more to help the victims.

If annuitants can no longer believe the guarantees stated by insurers, the perceived value of annuities, as a whole, will greatly diminish ultimately decreasing the demand for such products. While the ELNY case may be the only such case of an insured not being able to pay its annuitants, we do not know if it will be the last time this will happen. We do know that any perceived instability by insurers, whether real or imagined, could adversely affect the reputation of an industry that markets itself as a “safer” investment.

Regardless for the reason for ELNY’s demise there needs to be something in place to protect the rights of all annuitants ensuring that their guarantees are honored. Perhaps there is a need for additional legislation, perhaps the system as a whole needs to be re-examined.

1. http://online.wsj.com/article/SB10001424052702304299304577348342869349010.html
2. http://rescuecapital.com/blogs/2012/04/a-bad-day-for-structured-settlement-annuitants/
3. http://s2kmblog.typepad.com/rethinking_structured_set/2012/05/elny-hardship-fund.html
4. http://rescuecapital.com/blogs/2012/04/metlife-first-quarter-2012-losses/
5. http://structuredsettlements.typepad.com/structured_settlements_4r/2012/05/with-all-due-respect-to-elny-victims.html