Getting Stuck With Recycled Annuities in the Tertiary Market

That's the problem:  chances are you won't be able to resell the recycled annuity.  You've done your due diligence if you haven't lost any money investing in the payment stream in the first place, count your blessings.

Recycled annuities aren't all that bad, or are they?

If I were going to buy a recycled annuity, I would do it in a state like California, where stringent sanctions apply for sloppy contract writing.

California Insurance code 10139.4. (the code that governs structured settlement payment streams) states that any "transferee" that violates the code will be subject to the penalties of Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code.

"Transferee" means any person (also corporation) receiving structured settlement payment rights, 10134.(p).

So that means the transfer company can't make any mistakes in the contract through omission or disobeying the written law.  That doesn't mean mistakes still don't happen, but it does give me a lot of reassurance when I am doing my due diligence and going through all of the closing documents, before I invest.

Whereas in other states, their Structured Settlement Protection Act does not include punishment for sloppy contract writing.  That leaves me more vulnerable.  I could lose the money I put upfront, half way through the process, because something illegal happened.

Successful purchasing of recycled annuities can happen ethically, and safely.  Those who practice safe handling of such, are the first to exemplify reform of an antiquated system of structured settlement annuity payment streams.

Maybe one day, it won't be so complicated and risky, and there will be a stronger tertiary market for structured settlement payment streams where more liquidity exists.