Here at Edward Stone Law, we get phone calls every day from people who feel they have been taken advantage of by factoring companies when selling their structured settlement payments.

One of the most common things we hear is that sellers have been told it is legal to go to another state and sell their payments. The courts in some states, like New York, Maryland, and Pennsylvania look very carefully at transfer petitions. Factoring companies don’t like this because they make a big profit when they buy a seller’s payments.

This practice of a factoring company moving a seller from one state to another in order to buy their structured settlement payments is called “forum shopping.” Factoring companies are telling sellers it is legal to do this.  It is not.  The transfer petition must be brought in a court in the state in which the seller lives or is domiciled.

Every state except New Hampshire has a Structured Settlement Protection Act that sets forth the requirements a factoring company must follow in filing a transfer petition. The factoring company must comply with those laws, and a Federal statute, 26 U.S.C. Section 5891.  Section 5891 imposes an excise tax on a factoring transaction that does not qualify for exemption under the conditions specified in Section 5891(b).

If you are a seller who was victimized by a factoring company that filed a transfer petition in a state that you did not reside in, please contact Edward Stone Law by email at or by phone at (203) 504-8425.