# How do those structured settlement brokers stay in business? **URL:** \ **Category:** Miscellaneous and Personal Stuff I Must Share\ **Created:** [March 7, 2015, 8:06am UTC](https://boards.straightdope.com/t/how-do-those-structured-settlement-brokers-stay-in-business/714422 "2015-03-07T08:06:06Z")\ **Posts on this page:** 17\ **Page:** 1
**Author:** ![Leaper](https://avatars.discourse-cdn.com/v4/letter/l/4bbf92/32.png) [@Leaper](https://boards.straightdope.com/u/Leaper)\ **Post date:** [March 7, 2015, 8:06am UTC](https://boards.straightdope.com/t/how-do-those-structured-settlement-brokers-stay-in-business/714422/1 "2015-03-07T08:06:06Z")
I’ve seen ads for at least two (J.G. Wentworth and another I can’t recall): businesses that buy structured settlements from people in exchange for cash up front. Now, it’s pretty obvious how they profit, but what I don’t understand is how this is a sustainable business. First of all, how can there possibly be enough clients? I can see maybe, MAYBE, for one, but two or more?! Secondly, unless there’s some backdoor I don’t know about, once the deal is made, now the company is tied to the structure of the structured settlement. How does that cover ongoing business expenses and overhead? Anyone know? ---
**Author:** ![FairyChatMom](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fairychatmom/32/22080_2.png) [@FairyChatMom](https://boards.straightdope.com/u/FairyChatMom)\ **Post date:** [March 7, 2015, 11:07am UTC](https://boards.straightdope.com/t/how-do-those-structured-settlement-brokers-stay-in-business/714422/2 "2015-03-07T11:07:22Z")
Years ago, we held a mortgage and we wanted the cash right away, so we sold it to a mortgage broker. I’m guessing places like Wentworth don’t just specialize in settlements, but do all sorts of money changing. Maybe there are lots more people getting payouts than we can imagine, and maybe they settle for so much less than face value that the buying companies have a nice monthly income. You know they’ve got to be making money or they wouldn’t run so many ads on TV. ---
**Author:** ![Lochdale](https://avatars.discourse-cdn.com/v4/letter/l/edb3f5/32.png) [@Lochdale](https://boards.straightdope.com/u/Lochdale)\ **Post date:** [March 7, 2015, 1:17pm UTC](https://boards.straightdope.com/t/how-do-those-structured-settlement-brokers-stay-in-business/714422/3 "2015-03-07T13:17:25Z")
I think J.G. Wentworth went BK in the past. ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [March 8, 2015, 1:35am UTC](https://boards.straightdope.com/t/how-do-those-structured-settlement-brokers-stay-in-business/714422/4 "2015-03-08T01:35:32Z")
Back before that industry went large scale I used to do that on a small scale. It was easy to get customers to give you the equivalent of 25% APR on the investment. It wasn’t hard to meet overhead with margins like that. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [March 8, 2015, 2:50am UTC](https://boards.straightdope.com/t/how-do-those-structured-settlement-brokers-stay-in-business/714422/5 "2015-03-08T02:50:41Z")
There are a lot more structured settlements, annuities, private mortgages, and other similar arrangements out there than people think. Most of them are pretty small potatoes, but when you buy them up for 50% of the net present value (maybe even less) you don’t need a whole lot of them to profit over the long term. ---
**Author:** ![fruitbat](https://avatars.discourse-cdn.com/v4/letter/f/58f4c7/32.png) [@fruitbat](https://boards.straightdope.com/u/fruitbat)\ **Post date:** [March 8, 2015, 4:19am UTC](https://boards.straightdope.com/t/how-do-those-structured-settlement-brokers-stay-in-business/714422/6 "2015-03-08T04:19:20Z")
When you benefit from a class action lawsuit, particularly a personal injury related one, there is a tax benefit to accepting the payment as a structured settlement. The attorneys are often motivated as well to partner with insurance companies to sell these payouts as the primary recomended solution to their clients. If you think of all of the medical class action claims and the dollars involved it isnt surprising that an industry has developed to profit off of it. ---
**Author:** ![tripthicket](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tripthicket/32/297_2.png) [@tripthicket](https://boards.straightdope.com/u/tripthicket)\ **Post date:** [March 8, 2015, 5:33am UTC](https://boards.straightdope.com/t/how-do-those-structured-settlement-brokers-stay-in-business/714422/7 "2015-03-08T05:33:00Z")
This reminds me of one of those fake commercials from Saturday Night Live, the one about the bank whose only service was making change. “How can we profit from only making change? Volume.” ---
**Author:** ![Sarabellum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sarabellum/32/3492_2.png) [@Sarabellum](https://boards.straightdope.com/u/Sarabellum)\ **Post date:** [March 8, 2015, 4:21pm UTC](https://boards.straightdope.com/t/how-do-those-structured-settlement-brokers-stay-in-business/714422/8 "2015-03-08T16:21:28Z")
You’ve got to figure also, that there’s probably a lot of recent retirees that bought into annuities and such during the 60s and 70s that are now maturing. Lawsuit settlements, mortgages, structured buyout settlements, trust funds… I’m sure the J. G. Wentworth folks get more than just lotto winnings. I remember reading about one unfortunate lottery winner that sold 10 years of payments that should have been worth 15 million or so, for a cash payout of less than 2 million from one of those structured settlement places. ---
**Author:** ![Flywheel](https://avatars.discourse-cdn.com/v4/letter/f/eb8c5e/32.png) [@Flywheel](https://boards.straightdope.com/u/Flywheel)\ **Post date:** [March 8, 2015, 4:34pm UTC](https://boards.straightdope.com/t/how-do-those-structured-settlement-brokers-stay-in-business/714422/9 "2015-03-08T16:34:41Z")
> [@friedo](#): > > There are a lot more structured settlements, annuities, private mortgages, and other similar arrangements out there than are dreamt of in your philosophy. ---
**Author:** ![LurkerInNJ](https://avatars.discourse-cdn.com/v4/letter/l/ed655f/32.png) [@LurkerInNJ](https://boards.straightdope.com/u/LurkerInNJ)\ **Post date:** [March 9, 2015, 7:12pm UTC](https://boards.straightdope.com/t/how-do-those-structured-settlement-brokers-stay-in-business/714422/10 "2015-03-09T19:12:14Z")
They buy the settlement for much less than it is worth. 20% isn’t uncommon. ---
**Author:** ![LurkerInNJ](https://avatars.discourse-cdn.com/v4/letter/l/ed655f/32.png) [@LurkerInNJ](https://boards.straightdope.com/u/LurkerInNJ)\ **Post date:** [March 9, 2015, 7:21pm UTC](https://boards.straightdope.com/t/how-do-those-structured-settlement-brokers-stay-in-business/714422/11 "2015-03-09T19:21:53Z")
I know this guy and he makes a lot of money doing basically the same thing. He floats fees and settlements. > **[Hedge Fund's $100 Million Bet: Iran Will Pay for Terror Attack](https://www.wsj.com/articles/SB10001424052702304026304579451920304071640)** > > U.S. hedge fund RD Legal Capital plans to bet as much as $100 million that it can collect on a court judgment against Iran for a deadly terror attack in Beirut three decades ago. ---
**Author:** ![dbilzerian](https://avatars.discourse-cdn.com/v4/letter/d/cc9497/32.png) [@dbilzerian](https://boards.straightdope.com/u/dbilzerian)\ **Post date:** [March 9, 2015, 11:38pm UTC](https://boards.straightdope.com/t/how-do-those-structured-settlement-brokers-stay-in-business/714422/12 "2015-03-09T23:38:58Z")
There are a few different brokers in the industry. I have worked with a well to do company called … and there are primary market brokers and secondary market brokers. The companies that you named JG Wentworth and Peachtree are not considered brokers but rather direct market buyers for subprime liquidity financing. A broker in the primary market is somebody who helps to place an individual or group of individuals into a settlement often times with the help of a certified financial planner. These payments are made via an insurance company. The secondary market has two different types of brokers. One type of broker is somebody who you say I have 10 payments of $3,000 that pay out in the year 2017 and I need somebody to buy them. The broker will find an investor to purchase these for you. These brokers typically work on a flat fee ranging from $2,000 - 10,000 per transaction or a fixed percentage of less than 3% per transaction. So if they do volume they can do well. The other side of the coin has the buyers who buy for their companies and advertise on television. A recent report I read somewhere said about 2500 deals are done a month not the less than a dozen a previous poster had thought. These companies do okay and you can follow the ones that are public to generate an idea on how much profit they make or lose by examining their balance sheet. I do not claim to be a know it all and industry expert but hopefully this information was helpful in answering your questions. ---
**Author:** ![Idle\_Thoughts](https://avatars.discourse-cdn.com/v4/letter/i/838e76/32.png) [@Idle\_Thoughts](https://boards.straightdope.com/u/Idle_Thoughts)\ **Post date:** [March 10, 2015, 3:46pm UTC](https://boards.straightdope.com/t/how-do-those-structured-settlement-brokers-stay-in-business/714422/13 "2015-03-10T15:46:36Z")
I took the link out of your post, **dbilzerian**. Don’t spam. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [March 10, 2015, 4:42pm UTC](https://boards.straightdope.com/t/how-do-those-structured-settlement-brokers-stay-in-business/714422/14 "2015-03-10T16:42:03Z")
> [@Flywheel](#): > > are dreamt of in your philosophy. wut ---
**Author:** ![LurkerInNJ](https://avatars.discourse-cdn.com/v4/letter/l/ed655f/32.png) [@LurkerInNJ](https://boards.straightdope.com/u/LurkerInNJ)\ **Post date:** [March 10, 2015, 6:10pm UTC](https://boards.straightdope.com/t/how-do-those-structured-settlement-brokers-stay-in-business/714422/15 "2015-03-10T18:10:54Z")
> [@friedo](#): > > wut I think he meant your 50% figure. It’s illegal. ---
**Author:** ![friedo](https://avatars.discourse-cdn.com/v4/letter/f/8edcca/32.png) [@friedo](https://boards.straightdope.com/u/friedo)\ **Post date:** [March 10, 2015, 6:30pm UTC](https://boards.straightdope.com/t/how-do-those-structured-settlement-brokers-stay-in-business/714422/16 "2015-03-10T18:30:48Z")
> [@LurkerInNJ](#): > > I think he meant your 50% figure. It’s illegal. In some places. I know New York passed a statute limiting the present value discount for structured settlement sales. I don’t know the details, though, or what other state regulations there are. In any case, the 50% was just as example; I don’t know what the actual discounts are since I don’t have any settlements to sell. ---
**Author:** ![Robot\_Arm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robot_arm/32/18280_2.png) [@Robot\_Arm](https://boards.straightdope.com/u/Robot_Arm)\ **Post date:** [March 10, 2015, 6:39pm UTC](https://boards.straightdope.com/t/how-do-those-structured-settlement-brokers-stay-in-business/714422/17 "2015-03-10T18:39:51Z")
> [@Flywheel](#): > > are dreamt of in your philosophy. > [@friedo](#): > > wut > [@LurkerInNJ](#): > > I think he meant your 50% figure. It’s illegal. Pretty sure **Flywheel** was quoting _Hamlet_, there; a fellow of infinite whoosh.