Summary#
A-5695 would amend New Jersey’s 2001 Structured Settlement Protection Act and add new rules for companies that buy people’s rights to future settlement payments. Its stated goal is to add consumer protections; the bill would not itself guarantee that a transfer is approved or benefit a payee.
- Transferees would have to give payees a disclosure at least 10 days before signing, instead of three days. It would include the effective annual interest rate, transfer costs, and notices of the payee’s right to independent advice and to seek other offers. The payee would keep a three-business-day right to cancel after signing.
- Courts would have to consider the payee’s and dependents’ welfare, the payee’s understanding and preferences, future income or medical needs, prior transfers, and possible effects on public-benefit eligibility. A payee would generally have to attend the hearing in person.
- A court would have to appoint a guardian ad litem (a lawyer who independently advises the court) for proposed transfers involving a minor, or a payee who appears to have a mental or cognitive impairment. The transferee would pay the guardian’s reasonable fees.
- The bill would prohibit specified conduct by transferees and purchase companies, including fraud, coercion, misleading ads, certain improper fees and contact, and proceeding without required approval. Courts could suspend or revoke registration or bar a company from pursuing transfers in New Jersey.
- Starting January 1, 2028, a person acting as a transferee, trying to acquire a New Jersey resident’s payment rights, or filing for transfer approval would have to register with the Commissioner of Banking and Insurance. Registration would require a $50,000 surety or cash bond.
- The rest of the bill would take effect January 1, 2027. The bill is at the introduced stage and is not law.
What it means for you#
- People selling future settlement payments: You would receive more information and time before signing. A court would still have to approve the transfer. The bill does not require you to accept an offer or create a right to sell payments.
- Payees and dependents: The court would have to consider the listed best-interest factors, including support for dependents and possible effects on public benefits. For a minor’s payments, the court would have to find that proceeds are for the minor’s support, care, education, health, or welfare; excess proceeds must be preserved for the minor.
- Purchase companies and transferees: They would face new registration, bonding, disclosure, and conduct rules. The bill lists 14 prohibited actions, including failing to fund an approved transfer; filing in the wrong court intentionally; paying certain referral fees; using check-like documents to solicit payees; claiming a first option on the payee’s remaining payment rights; and contacting someone after being told to stop, at an inconvenient time, or repeatedly to harass them. Some listed prohibitions have exceptions.
- Annuity issuers and settlement obligors: They could rely on a court order to redirect payments and would be released from liability for those redirected payments, subject to the bill’s terms.
Money#
No publicly available information on the bill’s overall implementation cost.
- Companies would pay a $1,250 initial registration fee and a $200 annual renewal fee, intended to offset registration costs.
- Companies would have to provide a $50,000 bond. This is a security requirement, not a payment of $50,000 to the State unless a claim is made against the bond.
- The transferee would pay court-determined reasonable fees for a guardian ad litem.
- The Commissioner may impose a $10,000 administrative fine for failing to register after notice and an opportunity to file. Fine revenue may be retained for enforcement costs.
- The bill does not estimate staffing, court, or enforcement costs.
What is unclear#
- The supplied material does not include the full current Act, so the complete effect compared with current law could not be verified. The bill text identifies some current requirements, including the three-day disclosure period.
- The bill does not set detailed registration standards, review timelines, or reporting requirements. It also refers to registration applications being filed with the Secretary of State in one provision, while other provisions assign registration to the Commissioner.
- The bill does not explain how courts should decide when a payee “appears” to have a mental or cognitive impairment, or what evidence is enough to trigger that finding.
- The bill does not provide an overall fiscal estimate or say how many staff or resources the Commissioner or courts would need.
- The bill does not specify a start date for the general provisions beyond January 1, 2027; registration provisions start January 1, 2028.
Case for#
- A possible argument for the bill is that selling future payments can affect a payee’s long-term income and dependents. More time, clearer price information, and court review of specific needs could help make the decision better informed.
- Requiring independent advice to be free from the transferee’s influence could reduce conflicts of interest.
- Registration, bonding, and conduct rules would create ways to hold purchase companies accountable for certain violations.
- Special court review for minors and some payees with cognitive impairments could add protection where the payee may need extra support.
Case against#
- One concern is that the bill adds court and registration requirements without estimating their cost or explaining how quickly applications would be handled.
- The court’s best-interest test includes broad factors, including “any other” relevant facts. The bill does not specify how courts should weigh competing factors, which may lead to uncertainty.
- Companies would bear new fees, bonding costs, and restrictions. The bill does not estimate how those costs might affect offers to payees.
- The bill gives courts and the Commissioner significant enforcement powers, but some administrative details—including who receives registration filings—are unclear.