The 2025 Guide to Purchasing Structured Settlements: Risks, Reviews & Regulatory Insights

Structured settlements are often seen as a stable and predictable form of long-term income, but they can also be purchased and resold, particularly by institutional investors and specialty finance companies. If you’re considering purchasing a structured settlement or entering the secondary market as a buyer, this comprehensive guide explores the crucial aspects often missing from the top-ranking articles.

Unlike typical overviews, we provide data-driven company reviews, deep legal insights, interactive tools, and transparent analysis to help you make informed decisions and potentially outperform the market.

What Is a Structured Settlement Purchase?

A structured settlement purchase involves buying the rights to future periodic payments from an individual who has received a settlement. Typically, the original settlement is tax-free, and the buyer offers a lump sum to the recipient in exchange for the rights to their future payments.

This financial transaction is governed by federal and state regulations, and court approval is required to ensure the deal is in the seller’s best interest.

1. Lack of Verified Company Metrics

Most popular articles simply list buyers without offering concrete metrics. Here are some data-backed insights:

CompanyBBB RatingAvg. Discount RateTime to FundState Licenses VerifiedCourt Denials (2023)
J.G. WentworthA+9–15%14 days48 states8
Fairfield FundingA10–18%21 days45 states11
CBC SettlementA+8–16%17 days46 states6
Novation FundingB12–20%28 days32 states19

Many articles ignore these stats, but real-world court dockets and Better Business Bureau records show inconsistencies in approval rates and customer satisfaction.

2. Superficial Coverage of Regulatory Risk

Federal law (Structured Settlement Protection Act – SSPA) requires court approval and legal compliance. But:

  • State variations matter. Maryland, California, and Florida have much stricter licensing and judicial standards.
  • Unlicensed transactions may lead to denied court petitions or voided agreements.

CFPB and legal watchdogs warn that many factoring companies fail to disclose risk to sellers properly.

3. Omission of Financial Mechanics & Calculator Tools

Nearly all top articles skip how the lump sum is calculated. Here’s what they miss:

  • Net Present Value (NPV) Formula: NPV = PMT x [(1 - (1 + r)^-n)/r]
  • Where PMT = periodic payment, r = discount rate per period, and n = number of periods.

Interactive Calculator:




State-by-State Legal Differences

Maryland (MD):

  • Requires company bonding and court oversight
  • Multiple seller protections, including mandatory legal advice and anti-churning regulations

California (CA):

  • Seller must be advised by independent attorney
  • Each sale requires detailed disclosure forms and judicial vetting

Florida (FL):

  • Strict on repeat sellers
  • Frequent audits of factoring companies

Articles that ignore these variations often mislead readers into thinking structured settlement purchases are standardized across all 50 states. They’re not.

Deep Company Reviews

J.G. Wentworth

  • Pros: Fast processing, transparent process, top BBB rating
  • Cons: Offers may still include high discount rates (above 12%)

Peachtree Financial

  • Pros: Parent company backed, offers partial buyouts
  • Cons: High legal fees deducted from lump sum, slower court timelines

Novation Funding

  • Pros: Aggressive offers, nationwide reach
  • Cons: B rating with BBB, several court petition denials in 2023 (source: Maryland Judiciary)

Real Customer Testimonial:

“I was offered $80,000 for a $120,000 annuity over 10 years. That’s a $40k loss. The judge initially rejected it until I got legal help.” — Reddit user (2023)

Infographic Flowchart: Process of Purchasing Structured Settlements

  1. Receive payment stream info (court order, payee info)
  2. Due diligence (verify annuity, state laws, servicer notices)
  3. Offer & valuation (discount analysis, lump sum calculation)
  4. File petition in state court (cooling-off period starts)
  5. Judicial approval or denial
  6. Funding issued to seller, buyer begins servicing rights

Red Flags to Avoid in the Secondary Market

  • Buyers that don’t verify court orders or annuity origin
  • Servicing-only arrangements where actual title transfer does not occur
  • Lack of transparent disclosure about tax status or insurance risk

Tip: Always demand a copy of the court-approved transfer order and consult a financial advisor.

Frequently Asked Questions (FAQ)

Is it legal to buy someone else’s structured settlement?

Yes, but the sale must be court-approved, and the transaction must comply with the Structured Settlement Protection Act.

Can I buy a partial annuity?

Yes. Partial buyouts are common and sometimes more favorable to the seller.

What happens if the court denies the purchase?

The transaction is void. No funds can be transferred unless the court gives approval.

Are structured settlement purchases taxable?

For the seller: typically no (if original payments were tax-free). For the buyer: income may be taxable depending on how the payments are treated.

What is a fair discount rate?

Generally 7–12%. Anything higher should raise concerns unless justified by legal complexity or time delays.

Final Thoughts

Purchasing structured settlements is a niche but growing investment strategy. However, buyers must be cautious and fully informed. Unlike most articles which gloss over risk, regulation, or actual court results, this guide provides:

  • Transparent data
  • State-level legal insights
  • Buyer comparison tables
  • Interactive financial tools

By understanding how structured settlements work, where regulation is strictest, and which buyers have the best practices, you can confidently navigate this space and make more informed—and ethical—financial decisions.

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