San Mateo, CALIF. May 15, 2009 -- Indicating that the current consumer credit crisis is far from over, the amount of debt Freedom Debt Relief has settled for clients rose to more than $87 million for the period of Jan. 1-April 30, 2009, which is more than double the debt settled for the same period in 2008, and which represents an annual run rate of more than a quarter of a billion dollars.
During the first four months of this year, Freedom Debt Relief settled 15,010 creditor accounts for its clients - an increase of more than 50 percent over the same period in 2008. The average settlement FDR has achieved for its clients this year is approximately 42 percent, nearly a 5 percent improvement over the same period in 2008. That translates to average savings of 58 percent of total debt balances at the time of settlement (before program fees).
More people are turning to structured debt relief programs as the economy repositions to weather the current storm Debt settlement firms, such as Freedom Debt Relief, negotiate on the consumer's behalf with creditors, and offer an alternative to credit counseling, debt consolidation and bankruptcy. The firms negotiate with creditors, and typically can reduce a consumer's principal balance due -- rather than just interest rates -- with a settlement term of two or three years. Debt settlement, explained Andrew Housser, co-CEO of Freedom Debt Relief, is best suited for individuals with serious debt hardship who are struggling to make required minimum payments and who would otherwise be considering bankruptcy or credit counseling.
"More people are turning to structured debt relief programs as the economy repositions to weather the current storm," said Housser. "At the same time, as we are seeing through continually increasing traffic to our financial portal, Bills.com, consumers are looking to make the most of their money. More people are seeking tips and information about credit cards, credit scores and debt relief to help set their course."
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Monday, July 20, 2009
Monday, July 13, 2009
Taxes and structured settlements
In structured settlements, injury compensation is paid in installments over years rather than as a lump sum up front. It has long been argued that arrangements of this sort should be strongly favored by public policy: many accident settlements are premised on the need to cover years of needed therapy or future income lost through disability, and if it’s spent down too quickly through mishandling or “lottery winner syndrome”, the victim could wind up an expensive public charge. For reasons of this sort, structured settlements have been accorded highly favorable tax treatment.
Then an industry sprang up that offered to turn structured settlements into quick cash on the barrel, a choice that many lawsuit beneficiaries might be tempted to make (or might make after being leaned on by family members). Although laws often require that conversions of this sort be submitted for review to a court, judicial review may be cursory in the absence of adversary process to call attention to the potential drawbacks of a conversion. Not only has the structured-settlement-conversion industry managed to thrive, but somehow, as Shaun Martin notes, Congress has even been prevailed on to bestow favorable tax treatment on its doings — the same doings that tend to undermine the public benefits thought to arise from the original tax-favored structured settlement. More details are to be found in this decision, PDF, in which an appeals court recently sided with the factoring companies in a series of Fresno, California disputes (also discussed at this new blog on structured settlements, via Dan Schwartz).
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Then an industry sprang up that offered to turn structured settlements into quick cash on the barrel, a choice that many lawsuit beneficiaries might be tempted to make (or might make after being leaned on by family members). Although laws often require that conversions of this sort be submitted for review to a court, judicial review may be cursory in the absence of adversary process to call attention to the potential drawbacks of a conversion. Not only has the structured-settlement-conversion industry managed to thrive, but somehow, as Shaun Martin notes, Congress has even been prevailed on to bestow favorable tax treatment on its doings — the same doings that tend to undermine the public benefits thought to arise from the original tax-favored structured settlement. More details are to be found in this decision, PDF, in which an appeals court recently sided with the factoring companies in a series of Fresno, California disputes (also discussed at this new blog on structured settlements, via Dan Schwartz).
Source
Monday, July 6, 2009
Settlement company files for Chapter 11
A Delaware Valley company known for its sometimes humorous TV advertising of lump sum payments for insurance settlement checks is looking for a settlement of its own.
J.G. Wentworth announced that three of its non-operating parent holding company level affiliates – JGW Holdco, LLC, J.G. Wentworth LLC, and J.G. Wentworth, Inc., -- have filed reorganization plan under Chapter 11 of the U. S. Bankruptcy Code in U. S. Bankruptcy Court, Wilmington.
Wentworth has been affected by turmoil in the financial markets that makes it difficult to finance the conversion of insurance settlements from traffic accidents, annuities and other events from monthly checks to lump sum payments.
The filing is what is known as a prepackaged Chapter 11 that has most creditors signing on to a debt restructuring deal.
Over 90% of the term lenders approved the plan that will allow the company to substantially reduce its debt load at the parent holding company level while providing the enterprise with $100 million of new equity to support ongoing operations. Its operating units will continue to conduct business without interruption during the reorganization process, which is expected to be completed within 30 days.
J.G. Wentworth’s decision to file for Chapter 11 followed a eview of alternatives to address pressures from extremely challenging capital markets and high borrowing costs, and was unanimously approved by the company’s board of directors.
David Miller, Chief Executive Officer, said, "J.G. Wentworth serves a very important market niche, and we have successfully provided liquidity to tens of thousands of customers over the years. However, we have recently faced significant challenges due to the well-published disruption of the ABS market. After careful review, we made the decision to restructure the business through a Chapter 11 filing so that we can strengthen our balance sheet and be better positioned for the future. I am excited by the potential at J.G. Wentworth and believe that by taking the appropriate actions now, this business will move forward effectively. A strengthened J.G. Wentworth will offer customers more options as they seek cash for their illiquid assets, with the same great service they’ve come to expect.”
Since only senior term debt at the parent holding company level is being affected and DIP financing has been contracted for, customers completing a transaction with J.G. Wentworth will not be impacted by the filing, he said.
Since 1992, J.G. Wentworth has purchased over $3 billion of future payment obligations from consumers and is also the nation’s largest securitizer of structured settlement and annuity backed notes.
Source
J.G. Wentworth announced that three of its non-operating parent holding company level affiliates – JGW Holdco, LLC, J.G. Wentworth LLC, and J.G. Wentworth, Inc., -- have filed reorganization plan under Chapter 11 of the U. S. Bankruptcy Code in U. S. Bankruptcy Court, Wilmington.
Wentworth has been affected by turmoil in the financial markets that makes it difficult to finance the conversion of insurance settlements from traffic accidents, annuities and other events from monthly checks to lump sum payments.
The filing is what is known as a prepackaged Chapter 11 that has most creditors signing on to a debt restructuring deal.
Over 90% of the term lenders approved the plan that will allow the company to substantially reduce its debt load at the parent holding company level while providing the enterprise with $100 million of new equity to support ongoing operations. Its operating units will continue to conduct business without interruption during the reorganization process, which is expected to be completed within 30 days.
J.G. Wentworth’s decision to file for Chapter 11 followed a eview of alternatives to address pressures from extremely challenging capital markets and high borrowing costs, and was unanimously approved by the company’s board of directors.
David Miller, Chief Executive Officer, said, "J.G. Wentworth serves a very important market niche, and we have successfully provided liquidity to tens of thousands of customers over the years. However, we have recently faced significant challenges due to the well-published disruption of the ABS market. After careful review, we made the decision to restructure the business through a Chapter 11 filing so that we can strengthen our balance sheet and be better positioned for the future. I am excited by the potential at J.G. Wentworth and believe that by taking the appropriate actions now, this business will move forward effectively. A strengthened J.G. Wentworth will offer customers more options as they seek cash for their illiquid assets, with the same great service they’ve come to expect.”
Since only senior term debt at the parent holding company level is being affected and DIP financing has been contracted for, customers completing a transaction with J.G. Wentworth will not be impacted by the filing, he said.
Since 1992, J.G. Wentworth has purchased over $3 billion of future payment obligations from consumers and is also the nation’s largest securitizer of structured settlement and annuity backed notes.
Source
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