Consumer Protections and Rights Flashcards
7 cards from real Sell Structured Settlement practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Consumer Protections and Rights flashcards as text
What is the most common reason courts deny structured settlement transfer petitions?
Answer: The transfer is not in the best interest of the payee
Courts deny transfer petitions when they cannot affirmatively find that the transaction serves the payee's best interest, which is the central legal standard under most SSPAs.
Which of the following is generally NOT required to be disclosed to a seller under state SSPAs?
Answer: The factoring company's internal profit margin on the transaction
SSPAs require disclosure of the advance amount, discount rate, and seller-facing fees, but do not typically require companies to disclose their own internal profit margin.
A payee in a state with an SSPA completes a structured settlement transfer without obtaining court approval. What is the most likely legal outcome?
Answer: The transfer may be void or voidable and the factoring company faces the 40% excise tax under IRC Section 5891
Transfers completed without required court approval may be void or voidable under state law, and the factoring company would also face the 40% federal excise tax under IRC Section 5891.
What is a 'qualified order' as defined under IRC Section 5891?
Answer: A final court order or judgment approving the transfer of structured settlement payment rights that meets federal requirements
A qualified order under IRC Section 5891 is a final court order approving the structured settlement payment rights transfer that satisfies the federal requirements, thereby exempting the deal from the excise tax.
How must the transfer agreement be written under most SSPAs to protect the seller?
Answer: In plain language that clearly explains all terms and the seller's rights
Most SSPAs require transfer agreements to be written in plain language so sellers can readily understand the terms, their rights, and the full implications of what they are agreeing to.
Which parties typically have standing to object to a structured settlement transfer petition filed with the court?
Answer: Any interested party, including the seller's dependents and government benefit providers
Any interested party — which may include the seller's dependents, government agencies providing Medicaid or other benefits, or others affected — typically has standing to appear and object to the transfer petition.
What is the practical significance of the 'best interest' standard applied by courts in structured settlement transfer proceedings?
Answer: It requires courts to weigh the seller's financial need against the value they are giving up and the impact on dependents
The 'best interest' standard requires courts to holistically evaluate the seller's financial circumstances, the adequacy of the offer, and the impact on any dependents before approving the transfer.