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Peachtree Settlement Funding, LLC, sought judicial approval of a proposed transfer of certain future payments due Michelle Longe under a structured settlement agreement in exchange for the present payment of a discounted lump sum. The court, however, found that the proposed transfer was “ludicrous,” and it refused to approve it.

The case arose when Longe sought to transfer $70,000 in future payments ($20,000 out of a payment due April 17, 2025, and $50,000 out of a payment due April 17, 2030) in exchange for a gross advance amount now of $6,000. The court explained that the New York Structured Settlement Protection Act required that it evaluate a variety of factors, but particularly: (1) whether the transaction was fair and reasonable; and (2) whether the transfer was in the best interest of the payee, taking into account the welfare and support of the payee's dependents, if any.

This is not the first petition Longe has made to sell her structure. She received her settlement in 2005 for the wrongful death of her two children, and reportedly has petitioned the courts on 10 separate occasions, in three different counties, during the past seven years. The company she used for 8 of the petitions was Settlement Funding of New York, LLC also known as Peachtree Settlement Funding. The other petition was 321 Henderson Receivables Origination, LLC also known as J.G. Wentworth. The current petition was Peachtree Settlement Funding which merged with J.G. Wentworth in July 2011.

The court explained that in return for the transfer, Longe would receive a gross advance amount of $6,000, calculated by applying an annual discount rate of 16.04 percent. The $6,000 gross advance amount proposed to be paid to Longe represented less than 10 percent of the future payments of $70,000 that she would transfer to Peachtree. The court ruled that the transaction was “not fair and reasonable.”

It also found that the proposed transfer was not in Longe's "best interest." The court found that she was in a “genuine financial dilemma,” but added that previous cash payments she had received in other transfers of future structured settlement payments had been “just a temporary band aid” and never provided Longe with a long term solution.

Simply put, the court found that this case presented “the very justification for structured settlement legislation” that required the courts protect payees, such as Longe, from being “victimized by the allure of quick cash.” The fact that she was willing to accept $6,000 now in exchange for giving up $70,000 in future payments “in and of itself demonstrates the need for protection of the remaining portions of her settlement and the ludicrous nature of the proposal tendered by Peachtree,” the court declared. It then concluded that “giving up the right to $70,000 in future payments in exchange for a payment today of $6,000” was not in Longe's best interest, and it refused to approve the request.

The case is Matter of Petition of Peachtree Settlement Funding, LLC, No. 2012-0071 (N.Y. Sup. Ct. Broome Co. Feb. 28, 2012).

Hank Didier is co-founder of Vantage Capital Consultants, LLC.

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