You may have seen JG Wentworth’s commercials in which actors sing about needing cash now. Maybe you’re wondering how JG Wentworth works and if it really has a genuine way to relieve financial problems.
JG Wentworth is a legitimate company that buys annuities and structured settlements and offers debt settlement programs. Its core services entail significant financial trade-offs for consumers, so you should explore all of your options before deciding whether to work with JG Wentworth or a similar company.
[SEE: Best Debt Settlement Companies]
How Does JG Wentworth Work?
JG Wentworth is a financial services company that was founded in 1991. It has purchased structured settlements since 1992, and it introduced its debt settlement service in 2019.
JG Wentworth advertises other services that it doesn’t offer itself. Instead, it refers customers to partner companies. Note that JG Wentworth Home Lending was purchased by Freedom Mortgage in 2019 and is not affiliated with JG Wentworth.
Purchasing Structured Settlements and Annuities
Consumers can sell all or part of their future annuity payments to JG Wentworth in exchange for a lump sum of cash up front. JG Wentworth also purchases structured settlements and lottery winnings that are paid out annually.
If you sell a stream of future payments, the lump sum you get in cash is much less than what you would receive over time if you held on to the income stream. The purchaser applies a discount because money received today is worth more than the same amount received in the future. This concept is called the time value of money.
Debt Settlement
JG Wentworth’s debt relief program operates like most in the industry, according to William Davis, marketing manager for organic social and customer experience at JG Wentworth.
“The client enrolls unsecured debts into the program. They make the decision to stop paying their creditors and instead put funds into a dedicated savings account,” Davis says. “Once those funds have accumulated (usually starting around six months post enrollment), we reach out to their creditors and negotiate settlements on their behalf.”
The program typically takes 24 to 48 months to complete, and JG Wentworth says participants settle six debts on average.
JG Wentworth charges a fee of 18% to 25% of the amount of each debt settled in the program. The company says that participants save an average of 43% on their debts, but this figure does not include fees.
Lawsuit Cash Advances
JG Wentworth’s website directs consumers to business partners that offer cash advances for personal injury and other cases that they determine to have a high likelihood of success. If you lose your lawsuit, you do not have to repay the cash advance, but you must pay it back if you win. You also need your attorney’s approval to accept a cash advance and to comply with your state’s requirements. Advances on future lawsuit settlements are not allowed in every state.
Personal Loans
JG Wentworth’s website advertises personal loans that can be used to make purchases or consolidate debt. Loans are offered by partner companies. To view quotes, you must provide your name, email address, income, approximate credit score, requested loan amount and purpose of the loan.
Other Products and Services
JG Wentworth maintains an online marketplace in which consumers can find and compare auto, home, life and health insurance quotes from partner companies. Its home improvement marketplace provides quotes from third-party contractors for services like gutter cleaning, window installation and interior painting.
JG Wentworth also sells a variety of merchandise featuring its logo and advertising jingle.
[Read: Best Debt Consolidation Loans.]
Does JG Wentworth Have a Good Reputation?
JG Wentworth is accredited by the Better Business Bureau and has an A+ rating. On Trustpilot, JG Wentworth scores an “Excellent” 4.8 of 5 stars based on over 19,000 customer ratings.
In 2017, JG Wentworth filed for Chapter 11 bankruptcy and emerged following restructuring in 2018.
In 2024, the Consumer Financial Protection Bureau received 16 complaints about the company, 13 of which concerned its debt settlement services. One complaint was closed with monetary relief, and 15 were closed with an explanation.
Who Could Benefit From JG Wentworth’s Services?
Mike Chadwick, founder of Connecticut-based Fiscal Wisdom Wealth Management, says selling an annuity or structured settlement at a steep discount can be the right choice when it allows you to start a business that will generate more income than the payment stream would have.
“I’ve only seen a couple times that it really made a lot of sense. Even though they were getting a lot less money, the business venture they had in front of them was so good, the business venture would make up for the reduction of what they had,” Chadwick says.
And a debt settlement program can be beneficial if you have several outstanding debts that you can’t afford and you don’t feel comfortable negotiating with creditors yourself.
“The people who just aren’t really equipped to call up and have tough conversations with creditors, and for the people who really don’t have any friends or family capable of this, that’s really the ideal client for a debt settlement company,” Chadwick says.
There’s a substantial cost to selling annuities or structured payments or to entering a debt settlement plan, though. So it’s best to learn about alternatives before pursuing either of these options.
[Read: Best Personal Loans.]
Potential Pitfalls
One of the main drawbacks of selling an annuity or a structured settlement is you miss out on a large share of future earnings.
“You could be trading a six-figure guaranteed future payment for a smaller five-figure payment. So just know that, yeah, that solves a short-term problem, but it can create a long-term financial crisis,” says Yosi Yahoudai, co-founder and managing partner at California-based injury firm J&Y Law. It’s not uncommon for successful plaintiffs to receive structured settlements in which their winnings are released annually over many years.
There may also be tax consequences. Many structured settlements from personal injury cases are not taxable, but that may not be the case when selling an annuity that’s not part of a structured settlement.
Drawbacks of enrolling in a debt settlement program include the fees and the effect on your credit. Participating in a debt settlement program can lower your credit score when creditors report to credit bureaus that your accounts were settled for less than the amount owed. Settled debts remain on your record for seven years.
That said, if you’re already missing payments, your credit score is likely to be low whether you enroll in debt settlement or not. For instance, data from Freedom Debt Relief shows that the average credit score for those entering a debt settlement program ranges from 557 for the youngest clients to 594 for the older bracket.
Interest and late fees from creditors increase your outstanding balance until you reach an agreement to settle. Creditors aren’t obligated to negotiate a debt settlement plan, and they may sue you for nonpayment instead. JG Wentworth offers legal insurance through a separate law firm to cover the cost of defending you against creditors’ lawsuits, but this adds to the cost of your plan.
Unless you’re insolvent, meaning your debts exceed your assets, amounts forgiven in a debt settlement program must usually be reported to the IRS as taxable income.
And if your financial difficulties were caused by your spending habits, it may not be helpful to enter a debt settlement plan without changing how you manage your money. There’s a good chance the problem will recur if you continue spending as usual.
[READ: 6 Best Debt Payoff Apps According to Your Financial Goals]
Alternative Debt Solutions
Taking out a loan from a bank or credit union is often less expensive than selling an annuity or structured settlement. It’s generally easy to get approved for a loan against a guaranteed stream of future payments, Chadwick says. However, qualifying can be more difficult if your credit is already damaged by recent late or missed payments. If you’re having trouble paying your accounts with your current income, replacing several debts with one loan won’t be more affordable unless the new loan payment is significantly lower.
If you have a court-approved structured settlement, you could go back to the court and ask if the settlement can be revised.
Before signing up for a debt settlement plan, you might try talking to your creditors. “The first thing I would do before hiring anybody is to call the creditors first. Call each creditor, be honest, be very up front. Ask about hardship programs. Ask about payment deferral. They would probably rather work with you than with these very aggressive companies,” Yahoudai says.
By negotiating for yourself, you might achieve the same reduction in your debts that a company like JG Wentworth would, at a lower cost.
“Any pretty savvy consumer can do it on their own. Or even if you’re not savvy, if you’ve got a friend or a relative that’s pretty good at this, they can absolutely do this. … It doesn’t require a professional firm. And if you do it on your own, you’re going to save a small fortune,” Chadwick says.
Another option is to work with a nonprofit credit counseling organization. These organizations set up debt management plans that may lower your interest rates and monthly payments. However, debt forgiveness is not part of these, and most plans require a payment that will clear the account balances within five years. That may not be affordable for you.
If your debts are untenable, you might consider filing for bankruptcy. This hurts your credit, but it might be faster and less costly than a debt settlement plan — for instance, if you qualify for Chapter 7 and have few assets.
“Chapter 13 bankruptcy or even sometimes Chapter 7 bankruptcy can be sometimes less damaging long term to your credit than some of these debt settlement programs. Some of these debt settlement programs get you into a payment plan that is not good, that isn’t feasible, that doesn’t have safety valves to it,” says Travis Christiansen, attorney and owner of Utah law firm Boyack Christiansen Legal Solutions.
If you’re thinking of working with JG Wentworth or any other company that buys annuities or offers debt settlement, it’s wise to first speak with an attorney or financial advisor who can evaluate your situation.
“To a carpenter, everything looks like a nail,” Christiansen says. “If you go to a debt settlement company, everything looks like a debt settlement opportunity.”
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What Is JG Wentworth? originally appeared on usnews.com
