Statutory Guidelines [Appendix A(7) IRC 5891] regarding rules for structured settlement factoring transactions.
Rhode Island Structured Settlement Factoring Transactions refer to the legal process of selling structured settlement payments in Rhode Island to a third party in exchange for a lump sum of cash. A structured settlement is a financial arrangement in which individuals receive periodic payments as compensation for personal injury claims or other legal settlements. Structured settlement factoring transactions are common in situations where individuals need immediate access to a significant amount of money due to urgent financial needs such as medical expenses, debt consolidation, purchasing a home, or investing in education. The process of Rhode Island structured settlement factoring transactions begins with the individual who holds the structured settlement payments, known as the annuitant, contacting a structured settlement purchasing company or a factoring company. These companies specialize in buying future structured settlement payments at a discounted rate in order to provide a lump sum payment to the annuitant. In Rhode Island, like in other states, factoring transactions are subject to legal regulations to protect the interests of the annuitants. In 2001, the Rhode Island Structured Settlement Protection Act was enacted to provide a framework for these transactions. The act requires a court order to approve the sale of structured settlement payments, ensuring that the annuitant understands the transaction and is not coerced into selling their payments. The court evaluates whether the sale is in the best interest of the annuitant and determines if the proposed transaction meets the statutory requirements. Different types of structured settlement factoring transactions in Rhode Island may vary based on the unique circumstances of the annuitant. Some common types include: 1. Full Purchase: In this type of transaction, the annuitant sells their entire structured settlement payment stream for a lump sum amount. 2. Partial Purchase: In a partial purchase, the annuitant chooses to sell only a portion of their structured settlement payments while keeping the remaining payments to continue receiving periodic income. 3. Deferred Purchase: In certain situations, the annuitant may opt for a deferred purchase. This allows the annuitant to sell their future structured settlement payments after a specified period of time, usually to meet their changing financial needs in the future. It is important for individuals considering structured settlement factoring transactions in Rhode Island to seek professional advice from attorneys or financial advisors to understand the legal implications and potential impact on their financial situation.
