§ 141.001.Short Title

A short title, and the operative word in it is protection.

This chapter may be cited as the Structured Settlement Protection Act.

The person protected is the payee — someone who settled a serious injury or workers’ compensation claim for periodic payments rather than a lump sum, and who is later approached to sell those payments for cash now.

The transaction is called factoring, and it is heavily discounted by its nature. A buyer paying today for money arriving over twenty years applies a discount rate, and the rate applied in these deals has often far exceeded any ordinary cost of capital.

The people approached are the ones structured settlements were designed for: catastrophically injured, often unable to work, frequently facing an immediate need the payment schedule was not built for.

That is precisely why the settlement was structured in the first place — and why selling it can undo the protection the structure provided.

The chapter’s answer is not to prohibit the sale but to supervise it. A transfer requires advance court approval on express findings, preceded by disclosure in 14-point bold type at least three days before signing, with notice to every interested party and a hearing.

Texas enacted its version in 2003, following a model adopted across the states and reinforced by a federal tax provision that imposes a punitive excise tax on transfers not approved by a court under a qualifying state statute.

That federal lever is why these statutes are close to universal: without a state approval regime, the transaction is taxed out of existence.