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Structured Settlement Protection Act (“SSPA”)…cont

As noted, following the SSPA’s 2004 amendment, the requirement that the payee demonstrate hardship or dire straits was eliminated. Indeed, the legislative history reads as follows:

An adult who has not been adjudicated incompetent or incapable of handling his or her own affairs is generally capable of determining what is in their own best interests with regard to property and affairs, including their structured settlement payment rights, without having to demonstrate or prove hardship,’ provided the consumer has been afforded the admonitions to consult with counsel, the rights of cancellation, and the disclosures required by the 2002 Act.

Mr. EV is a 58 year old married man who avers that he has no dependents or minor children.

He is a unionized plumber who was temporarily unemployed at the time of the commencement of this petition. Since November 2008, he has resumed work as a salaried plumber earning approximately $48.00 per hour straight-time and $96.00 per hour for over-time work. A review of his payroll records reveals that he earned $28,932.90 between mid November 2008 and December 31, 2008. The payroll records for the pay period 2/26/09 to 3/04/09 reflect earnings of approximately $14,755.00, as the year-to-date amount. Extrapolating the year-to-date amount, it is expected that Mr. EV will receive approximately $153,452.00 by year’s end, considering a minimum amount of over-time. While at first blush this appears to bode well for the grant of the instant petition, delving deeper into the various other factors to be considered by this Court, appearances can be deceiving.

Income tax returns proffered by Mr. EV (2003-2007) denote a married, filing separately status. Mrs. EV’s earnings average less than $2,000.00 per year. So that, Mr. EV’s representation that he has no dependants is belied by his spouse’s minimal earnings. His returns for the years 2003 and 2004 are of no moment, however, those subsequent filings for 2005, 2006 and 2007, do cause the Court great concern.

These tax returns are extremely troubling to the Court for several reasons. In the first instance, Mr. EV has demonstrated a propensity to engage in high stakes gambling. In the parlance of the gambling world, he plays large. While it is one thing to set a limit with a view towards winning back what you have gambled, or preferably, only gambling over and above the break even point.

This failure of judgement with regard to the financial consequences of his actions leads the Court to the conclusion that Mr. EV’s gambling propensity has become an addiction. There is no other explanation which would excuse his failure to make his mortgage payments. Even if Mr. EV was employed part-time as a plumber in 2007, he certainly had the opportunity to first pay off his mortgage and other living expenses with his gambling winnings, before running the risk of gambling losses.

Moreover, the successive income tax returns were prepared by the same certified public accountant whom the Court must presume advised Mr. EV of the tax consequences of his filings. No doubt he was advised that the IRS would consider it reasonable to expect losses from gambling for three successive years and thereafter, if no profits were realized in his capacity as a “professional gambler”, the presumption that his gambling was a hobby would then take effect and the IRS could then review successive returns and tax his gambling losses.

Given that 2007 marks the first indication in his tax returns that he considers himself a professional gambler for tax purposes, then the Injury Court assumes (since it does not have the 2008 returns) that Mr. EV will continue his gambling pattern of losing as much as two million dollars per year, until the end of 2009.

1.) Home conversion: As set forth above, there is no documentary proof nor admissible evidence before the Court to suggest that this is a viable option for Mr. EV. 2.) Credit Card Debt: Had Mr. EV sought professional financial advice with regard to the soundness of this transaction no doubt he would have been informed of other options to reduce his credit card debt. His predicament is also shared by tens of thousands of other Americans who were lured by “come-ons” from credit card companies. In many instances pre-approved credit cards with “teaser rates” were mailed to consumers in the hopes that less credit-savvy consumers would retain them. Most consumers never read the very “fine print” which reflected the true interest rate following the expiration of the “come-on” period. If he is so inclined Mr. EV is encouraged to seek financial counseling from Bronx Legal Services located at 329 East 149th street, Bronx, NY 10451, (718) 233-1384, or any other financial counselors who provide these services either “pro bono”, free of charge or on a sliding scale. Otherwise, Mr. EV has failed to demonstrate to the Court, what if any steps he has taken to remedy this predicament. 3.) Risk of Foreclosure: In support of this fear, Mr. EV includes several notices from his mortgage servicer, including a delinquency letter and more important for the Courts edification, details with regard to foreclosure prevention and homeowner retention programs. As of the date of the instant application, Mr. EV was not in foreclosure but merely delinquent.

Notwithstanding that Mr. EV is significantly delinquent in his mortgage payments he has a Federal Housing Administration (“FHA”) backed loan, which is insured by the U.S. Department of Housing and Urban Development (“HUD”). In response to the mortgage foreclosure crisis, 2008 ushered in federal and state foreclosure prevention programs. In an effort to stave off the rippling economic effects of vast numbers of foreclosures, both HUD and the FHA have instituted incentives for lenders who offer “work-out” plans to borrowers at risk of foreclosure and financial penalties for those who fail to offer assistance. Since the FHA owns 100% of the risk of loss for the mortgages it insures, it requires its loan servicers to engage in loss mitigation.

Since Mr. EV was temporarily unemployed and continues to demonstrate an income stream, both in the form of a salaried paycheck and the subject annuity, he qualifies for a variety of foreclosure retention options. Such as: special forbearance, streamline refinance, loan modification, or even a partial claim where HUD would pay up to 12 months of arrears and take a junior lien on the home in the amount of the partial claim. These are all avenues to be explored by Mr. EV without actually experiencing injury foreclosure.

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