I’ve been a lawyer for 27 years, more than half my live. I’ve handled over 100,000 intakes in that time. Recently I was approached regarding a a type of transaction that I had never seen before. It involved pension factoring and a company called Voyager Financial Group, LLC. Voyager approaches people who need money and have an income stream from a pension fund or something similar, and they offer their services as brokers to get the person cash up front for his or her pension scheme. the pensioner pledges the income from the pension as security for the advance. It seems obvious to me that this is a loan by any other name but so far Voyager and like companies have dodged scrutiny as lenders. Voyager has run afoul of securities commissioners in several states because Voyager does not put up its own money, it recruits investors to buy the income streams. Because this is passive income for the investor, it is a security and should be registered.
The best mainstream journalistic article that I’ve seen on the subject is
this one from the New York Times.
In the business world, factoring is common. The most common factoring is accounts receivable. Another type of factoring involves payment in advance for structured settlement payments. The intermediaries in these transactions can potentially rip off both the investors and the person obtaining the lump sum, a/k/a the borrowers. The implied interest rates in these deals are quite high. From what I’ve seen the rates exceed the 21% maximum legal rate for mainstream lenders in most states. It’s not such a great deal for the investor, either. The pensioner can actually cut off the stream of income. I think it’s arguable whether these contracts are ever legal due to lack of disclosure on the consumer side and lack of registration of the various lenders and intermediaries.
If you have a problem with a pension factoring company, or of you sold pension payments, especially if you are getting collection letters relating to the pension assignment, I am interested in hearing from you. Call me at 317-662-4529. If you are not in my area (Indiana), I will try to link you up with a NACA attorney.