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Lottery Winnings and State Owned Debt
Lottery Winnings and State Owned Debt
Do you owe money on a student loan? Back child support? Back taxes and other debts? Then the North Carolina Lottery is definitely not for you! North Carolina sold its first lottery ticket in March 2006 and since then the state has collected $1.3 million in back child support, delinquent student loans, back taxes, and other debts including medical bills owed to state and local hospitals. Under North Carolina state law the lottery is required to check to make sure winners do not owe the government any money.
204 state lottery winners have paid over $274,000 in back child support since the North Carolina lottery was started. North Carolina lottery officials say that student debt and unpaid medical bills are common among lottery winners. Alice Garland, a spokeswoman for the North Carolina state lottery says that most lottery winners indicate that they are willing to pay their debts voluntarily. When asked what they will use lottery winnings for, most winners say that paying off their mortgage is their top priority.
For some lottery winners only a few hundred dollars are taken for debts while others have seen their entire jackpot confiscated by the state. Ms. Garland said that some winners who had their lottery winnings garnisheed were actually relieved to have past debts settled. One winner who won $100,000 on a scratch off ticket was happy his children were going to get the back child support he owed.
Of course many lottery winners are less than pleased to have their winnings seized. One $35,000 winner who walked out of the lottery office with nothing wondered aloud which former wife would get the money. Many state lotteries routinely check for state owned debt which includes back taxes and child support so it is wise for lottery winners to check the policies of the lottery in the state where they will collect their lottery winnings.
Several states are considering the possibility of offering online lottery tickets. Players could log on to a state website and make an online lottery purchase. Computer technology could also allow the state to check winners against a database of those who owe fines, back child support and other debts. Lottery players could also check for the latest lottery results and winners could be notified by email. Most players say they would appreciate the convenience that the ability to buy online lottery tickets would bring. Online lottery tickets would eliminate the need for a trip to a lottery retailer and most players would welcome the move online.
Lottery Winners and Predatory Lenders
Lottery Winners and Predatory Lenders
We have all seen the ads on late night by predatory lenders offering cash advanced for those who have received various settlements from lawsuits and lottery winnings. Many lotteries pay out jackpots over a period of years and it is those structured agreements that are targeted by predatory lenders. Payments by these companies range from as much as 90 cents on the dollar to as little as 30 cents on the dollar. Essentially the lottery winner assigns the lottery payments to the lender for a much smaller lump sum. Many of these lenders monitor lottery winnings and lawsuit settlements and use hard sell tactics to convince the victim to take a smaller lump sum payment.
Last year a New York man won $2,000 a week for life in a $5 scratch off lottery game. John Borrel of Graniteville is being sued by a Florida company that is alleging that Borrel did not pay back $10,000 in cash received against his lottery winnings. The lawsuit filed by Encore Funding LLC seeks the original $10,000 plus 18% interest and legal fees which are likely to be considerable. The lawsuit alleges breach of contract and ‘unjust enrichment’ whatever that means. According to the court Borrel, 38, won a minimum of $2 million to be paid in $26,000 quarterly installments. The lottery payouts continue if the winner lives more than two decades.
In October Borrel entered into two separate contracts for cash advances of $5,000 each. Encore’s lawyer said the company and Borrel are working out an agreement where Encore would pay Borrel for a portion of his lottery winnings from 2018 through 2027. In return Borrel would assign the lottery payments to Encore. The agreement also requires spousal consent and Borrel had told the company he is not married.
This situation highlights the difficulties lottery winners can get themselves into by seeking large cash payments financed by a large structured lottery settlement. Any lottery winner considering a similar move should check out all the terms and conditions of any contract or they could easily find themselves involved in a complicated expensive lawsuit. Most financial experts advise lottery winners to see a legitimate financial planner and get competent advice.
When buying lottery tickets players need to consider what actions they would take if they found themselves sudden millionaires. There are plenty of scammers waiting to take advantage of big winners. A good financial planner or adviser is a must. When buying lottery tickets it is always a good idea to plan ahead.