Maryland may soon be buckling down on companies that purchase settlement rights to lawsuits. The companies argue, however, that the proposed rules would lead to longer court proceedings which would delay the sales.
Many people, however, hope the rules will delay and maybe even put a full stop to these agreements.
Previously, Maryland courts had quietly approved these transactions without overseeing them, leading to many unfair deals. They have left already vulnerable people even more vulnerable and open to be exploited.
Structured governing of transactions is needed to keep the poor and disabled people moving through the court systems safely, according to the Washington Post.
A structured settlement is given to an individual who chooses to receive a large sum of settlement money from a lawsuit in installments rather than a lump sum. In some cases, however, needs arise and the individual needs the money from their structured settlement in that lump sum.
Since those who already elected to receive installments cannot change the payments, so they turn to the market of selling structured settlements. This market will offer immediate access to the money from their future payments and is especially helpful to those who may face foreclosure or eviction unexpectedly.
The assets are legally theirs, and tapping into those funds is often unavoidable. With more than $6 million each year going into a fund for new structured settlements, this market simply opens the floodgates to receive the payments early.
In situations where homeowners are facing foreclosure, they can’t afford to wait for delays in the judicial review process, which is what will happen if rule changes go through in Maryland.
Even though it may lengthen the judicial process, it will provide better transparency in agreements, thus safeguarding consumer interests. Maryland’s Judicial Review Committee needed to find a way to pursue a solution that both protects consumers, maintaining their right to privacy, while also maintaining the flexibility the structured settlement purchasing industry provides.
The rules committee of the Maryland Court of Appeals is currently looking to make changes in the review and approval of structured settlement buyouts.
This is where people with court-awarded settlements paid out monthly would receive lump-sum payments from a company. In return, the company gains the rights to the proceeds.
The rules will hopefully safeguard against companies that pay only a fraction of the settlement value to those in business with them. In August, for instance, the Washington Post reported that a case on lead paint exposure led to a victim being paid just nine cents for every dollar.
But back in 2000, the Maryland General Assembly passed a law which allowed the courts to decide if a deal like this was in the best interests of the seller. A report released last month, however, showed that the procedure was not being properly followed, which allowed companies “to take improper advantage of vulnerable recipients.”
The Maryland General Assembly has decided that with this finding, they will officially begin looking at ways to change the rules that prevent abuses, but leave the benefits there. They will also look into ways to possibly fix the wrongdoings that have already happened with these deals.