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Updated over 13 years ago on . Most recent reply presented by

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849
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Loc R.
  • Note Investor
  • Pasadena, CA
544
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849
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Thoughts on the assignablitity of this "cash flow"

Loc R.
  • Note Investor
  • Pasadena, CA
Posted

So I've got an interesting cash-flow and would like the help of BP to brainstorm this one.

I had a lady contact me about a cash-flow stream she has been receiving and would possibly like to sell to me.

The background on this cash-flow is that she won a court case against her ex-husband for child support. The "principle" amount was $20,000 (which he paid immediately), and the penalties and interest were $18,000. He has been paying the court-ordered minimum of $200 twice a month, and has been doing so for the last 19 years (yes, there is a 19-year payment history). He has been doing this, I suppose, to be a jerk and string her along for the money owed to her.

Here's the interesting part: because he does not pay off the penalties & interest amount in full, every year the state re-penalizes him. So, in essence, that amount stays around $18,000 and has done so for the last 19 years.

In addition, the court order reads that in the event of (the ex-husband's) death, his estate would be responsible for the payments. I think that only then will the executor of the estate pay off the "balloon" of $18,000.

So, my questions/issues are:

How would I structure the purchase of this cash flow? Technically, I'm not buying a promissory note.

The court order does not mention anything about the assignability of the payments (or for that matter, the non-assignability of it). In addition, we are talking about the penalties & interest associated with it, not the actual "principle" itself.

The other issue would be securing it. At this time the "best" solution I have come up with is to open a joint account with the ex-wife, and have the state (which collects the payments electronically then deposits into her account) re-direct payment to our joint account, and eventually have her "drop off" from the account.

Any thoughts would be appreciated.

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