If you are considering selling your future structured settlement payments for an immediate lump sum in North Carolina, it's important to understand the laws surrounding this type of transfer. In addition to federal law, 49 states have their own laws that govern the process of transferring the rights of a structured settlement annuity.
In North Carolina, the law surrounding the transfer of rights to future structured settlement payments is Article 44B. Structured Settlement Protection Act.
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 of structured settlement payment rights unless the transfer has been authorized in advance in a final order of a court of competent jurisdiction or a responsible administrative authority based on express findings by such court or responsible administrative authority that:Click here to read the full North Carolina law.
(1)The transfer complies with the requirements of this Article [of] law;
(2) Not less than 10 days prior to the date on which the payee first incurred any obligation with respect to the transfer, the transferee has provided to the payee a disclosure statement in bold type, no smaller than 14 point setting forth:
a. The amounts and due dates of the structured settlement payments to be transferred;
b. The aggregate amount of such payments;
c. The discounted present value of such payments;
d. The gross amount payable to the payee in exchange for such payments;
e. An itemized listing of all brokers' commissions, service charges, application fees, processing fees, closing costs, filing fees, administrative fees, legal fees, notary fees and other commissions, fees, costs, expenses, and charges payable by the payee or deductible from the gross amount otherwise payable to the payee;
f. The net amount payable to the payee after deduction of all commissions, fees, costs, expenses, and charges described in sub-subdivision e. of this subdivision;
g. The quotient (expressed as a percentage) obtained by dividing the net payment amount by the discounted present value of the payments;
h. The discount rate used by the transferee to determine the net amount payable to the payee for the structured settlement payments to be transferred; and
i. The amount of any penalty and the aggregate amount of any liquidated damages (inclusive of penalties) payable by the payee in the event of any breach of the transfer agreement by the payee;
(3) The transfer is in the best interest of the payee;
(4) The payee has received independent professional advice regarding the legal, tax, and financial implications of the transfer;
(5) The transferee has given written notice of the transferee's name, address, and taxpayer identification number to the annuity issuer and the structured settlement obligor and has filed a copy of such notice with the court or responsible administrative authority;
(6) The discount rate used in determining the net amount payable to the payee, as provided in subdivision (2) of this section, does not exceed an annual percentage rate of prime plus five percentage points calculated as if the net amount payable to the payee, as provided in sub-subdivision (2)f. of this section, was the principal of a consumer loan made by the transferee to the payee, and if the structured settlement payments to be transferred to the transferee were the payee's payments of principal plus interest on such loan. For purposes of this subdivision, the prime rate shall be as reported by the Federal Reserve Statistical Release H.15 on the first Monday of the month in which the transfer agreement is signed by both the payee and the transferee, except when the transfer agreement is signed prior to the first Monday of that month then the prime rate shall be as reported by the Federal Reserve Statistical Release H.15 on the first Monday of the preceding month;
(7) Any brokers' commissions, service charges, application fees, processing fees, closing costs, filing fees, administrative fees, notary fees and other commissions, fees, costs, expenses, and charges payable by the payee or deductible from the gross amount otherwise payable to the payee do not exceed two percent (2%) of the net amount payable to the payee;
(8) The transfer of structured settlement payment rights is fair and reasonable; and
(9) Notwithstanding a provision of the structured settlement agreement prohibiting an assignment by the payee, the court may order a transfer of periodic payment rights provided that the court finds that the provisions of this Article are satisfied.
If the court or responsible administrative authority authorizes the transfer pursuant to this section, the court or responsible administrative authority shall order the structured settlement obligor to execute an acknowledgment of assignment letter on behalf of the transferee for the amount of the structured settlement payment rights to be transferred; provided, however, structured settlement payment rights arising from a claim pursuant to Chapter 97 shall not be authorized.
To sell your future structured settlement payments, you'll need to comply with both state and federal law. These laws are in place to protect you.
In 2001, Congress enacted the Victims of Terrorism Relief Act, which includes a provision relating to structured settlement factoring transactions (26 U.S. Code § 5891). This provision imposes a high excise tax on structured settlement factoring transactions unless the transactions are “approved in advance in a qualified order.” The Act defines a qualified order, and it requires that the order be issued “under the authority of an applicable State statute by an applicable State Court.” Since then, 49 states and the District of Columbia have enacted state statutes setting for the procedures for court approval of structured settlement factoring transactions.
Qualified order. --For purposes of this section, the term “qualified order” means a final order, judgment, or decree which--
(A) finds that the transfer described in paragraph (1)--
(i) does not contravene any Federal or State statute or the order of any court or responsible administrative authority, and
(ii) is in the best interest of the payee, taking into account the welfare and support of the payee's dependents, and
(B) is issued--
(i) under the authority of an applicable State statute by an applicable State court, or
(ii) by the responsible administrative authority (if any) which has exclusive jurisdiction over the underlying action or proceeding which was resolved by means of the structured settlement.
26 U.S. Code § 5891 also offers some helpful definitions and other rules for selling structured settlement rights. Read the full law here.
We have a few articles that might be helpful if you are considering selling your structured settlement payments:
Transferring the rights to your future payments is permanent, and it's not the best choice for everyone. We encourage you to speak with a financial expert about your asset and to weigh all your options if you are in need of immediate cash.
CrowFly is committed to creating a positive experience that is built on trust, accessibility, and transparency for people who have structured settlements. For more information, contact CrowFly at 833-CROWFLY, email email@example.com, or get started with a structured settlement quote.