Statutory Guidelines [Appendix A(7) IRC 5891] regarding rules for structured settlement factoring transactions.
North Carolina Structured Settlement Factoring Transactions involve the transfer of structured settlement payments in exchange for a lump sum of cash. Structured settlements are typically awarded to individuals who have experienced personal injuries or other damages and are receiving periodic payments as a result of a legal settlement or judgment. In the state of North Carolina, structured settlement factoring transactions are regulated by the North Carolina Structured Settlement Protection Act (NCS SPA). This legislation establishes a legal framework to protect structured settlement recipients and ensure transparency in the transfer process. Under the NCS SPA, there are different types of structured settlement factoring transactions: 1. Traditional Factoring: In this type of transaction, a structured settlement recipient sells a portion or all of their future payment rights to a factoring company in exchange for a lump sum payment. The factoring company becomes the new payee of the structured settlement payments. 2. Partial Factoring: Some structured settlement recipients may choose to only sell a portion of their future payment rights. This allows them to retain some regular income while still receiving a lump sum payment from the factoring company. 3. Non-Recourse Factoring: Non-recourse factoring transactions are another option available to structured settlement recipients in North Carolina. This type of transaction ensures that if the payments sold are not received as agreed, the factoring company bears the risk, not the recipient. 4. Interim Funding: Interim funding provides a structured settlement recipient with immediate access to cash while waiting for their legal settlement or judgment to be finalized. This allows individuals to cover urgent expenses while their case is pending. It is important to note that while structured settlement factoring transactions provide immediate cash, they often come with substantial fees and discounts, as factoring companies typically assess a discount rate on the future payments being sold. Structured settlement recipients in North Carolina considering a factoring transaction should consult with an attorney or financial advisor to fully understand their rights, obligations, and any potential implications. Any factoring transaction must also undergo court approval to ensure it is in the best interest of the structured settlement recipient.
