It is not uncommon for plaintiffs in Texas to receive a structured settlement as opposed to a lump sum as compensation for their losses. Generally, there are certain tax benefits for the plaintiffs and cost savings for defendants associated with structured settlements. Despite settling for a series of payments over time, many plaintiffs and their dependents will later wish to transfer that payment stream in exchange for an immediate cash payment. Numerous companies are in business to purchase structured settlement payments at a discount from recipients; however, these transfers are highly regulated in the state of Texas.
Chapter 141 of the Texas Civil Practice and Remedies Code, entitled Structured Settlement Protection Act, governs the purchase of structured settlement payments. Most significantly, the Act requires certain disclosures to payees and requires court approval for any transfer of payments. The court must find that the transfer is in the best interest of the payee and be satisfied that the payee has received advice from an attorney or waived the right to the advice in writing. Failure to comply with Chapter 141 voids any attempted transfer. Tex. Civ. Prac. & Rem. Code Ann. § 141.001 (West).
Chapter 141 was put into law to protect plaintiffs that wish to transfer their right to receive payments over time. If you are considering selling a structured settlement, it is prudent to seek the advice of a competent lawyer experienced in the transfers of these types of payment streams.
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