What Is a Structured Settlement Bond?

Structured settlement bonds, sometimes called structured funding bonds or structured settlement transferee bonds, are required for structured settlement purchase companies to register their business within certain states. Currently, these bonds are mandated in 4 states: Georgia, Maryland, Louisiana, and Nevada. This list will likely grow in the future to protect structured settlement payees in other regions.

Structured settlement bonds provide a source of recovery for a payee if they obtain a judgment against a structured settlement purchase company for a violation. Violations mainly relate to coercion and unfair business practices, such as misguiding a payee into selling their structured settlement for less than it is worth.

This is why, for example, the bond requirement was introduced in the state of Maryland. A company by the name of Access Funding was alleged to have misled the poor and disabled victims of a lead poisoning settlement into selling their structured settlements for a fraction of what they were worth.


How Much Does It Cost?

A purchase company must obtain a bond in the amount of $50,000 in Georgia, Louisiana, and Nevada; and $100,000 in Maryland. The premium rate is a small percentage of this, but you will need to contact an agent to receive an accurate rate and determine your cost.

Structured settlement bonds renew annually when the registration of the applicant (purchase company) is renewed. In the event of a cancellation of the bond, the registration of the structured settlement purchase company will automatically expire and will need to be renewed.


How Quickly Can I Get the Bond?

In most cases, the bond can be issued within 1-3 days.


Underwriting Requirements

Any business applying for a structured settlement transferee bond will need to undergo the underwriting process, which includes credit and financial analysis.

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