News and Tips on structured settlement transfers.

Cash

February, 2011


28
Feb 11

Why You Shouldn’t Sell Your Structured Settlement

Those late-night ads are so tempting.  Who wouldn’t want to trade in a stream of payments that you’ll have to wait years to get for a big wad of cash now?  Well, not so fast.  Here’s a list of reasons why you shouldn’t sell.

Reliable Income.  One reason why structured settlements are such a popular way to settle personal injury lawsuits is because they provide a steady stream of income to the plaintiff.  If an injury has left you unable to work, either temporarily or permanently, you are going to need that income to cover your living and medical expenses.  Insurance companies administer structured settlements, and they do so by investing the lawsuit proceeds into conservative, safe investments intended to provide the income you will need over time.  This reliability is also what makes structured settlements so desirable to factoring companies, who know they can buy your stream of payments and there is virtually no risk that the payments won’t eventually come in.  Can you truly afford to trade in that stream of income?  How will you support yourself, especially if you can’t work?  How will you cover your medical bills?  As annoying as it might seem that you have to “wait” months or even years for your settlement, the idea is meant to protect you.  A structured settlement is in your best interest.

Discount Rate.  If you’ve already looked into the structured settlement process, or even sought offers for the stream of payments you want to sell, you were probably shocked to see how small the offers were.  This is the discount rate in action.  Structured settlement factoring companies – the folks buying your settlement – are in business to make a profit.  They use a discount rate to roll back the total amount of your payments to an amount they’re willing to pay.  This discount rate covers their expenses and also ensures they’ll get a fat rate of return.  Discount rates are often in the double digits.  Would you pay that kind of interest on a debt?  If you wouldn’t, why would you accept that kind of a discount on your structured settlement?

Temptation.  You’re going to give up guaranteed future income for a lump sum of cash now.  What do you plan to do with that money?  Do you think you can invest it better than the pros at the insurance company?  (You probably can’t.)  Are you going to invest in a business?  (What if that business fails?)  Do you honestly believe that you can resist the temptation to spend a giant sum of money sitting in your bank account? (Most people don’t have that kind of discipline.)  Even if you do, as soon as those funds are in your hands, your family is sure to come up with “reasons” why they need some of it.  A structured settlement is built-in discipline, and you will be grateful for it in the long run.

If you need help selling your structured settlement, annuity or lottery payments,
contact us today. We are here to answer your questions and help you obtain the
highest possible price for your payments.


27
Feb 11

Reasons Why You Should Sell Your Structured Settlement

The point of a structured settlement is to provide you a source of future income to take care of you, so if you’re thinking of cashing it out, you really should weigh the decision heavily.  When you think of why you want to sell, if your reasons don’t match the ones listed below, you should consider alternatives.

A True Financial Emergency.  This should be a genuine, virtually life-or-death financial emergency that can’t be resolved any way else.  Life-or-death medical care is an emergency.  Buying a new wardrobe or going on a vacation is not, no matter how tattered your current trousseau, or how stressed out you are.  Fixing a broken down car might be an emergency, but can you fund the repairs some other way?  If there’s another way to solve the problem, cashing out your structured settlement is NOT your best option.

A Problem Settled for Good.  So, you have some expenses you want to pay, perhaps some high-interest credit cards.  The interest savings on the plastic might make cashing out your structured settlement worth your while, but will the proceeds from your settlement pay them off completely?  Even if so, do you have some other way to meet your living expenses so that you won’t max out your credit cards again?  If your answer to those questions was “no,” selling your structured settlement is NOT an option.  Instead, you need credit counseling and help with your budget so that you can stop living beyond your means.

A Guaranteed Investment.  Your structured settlement is being invested by pros, usually employed by the insurance company administering your settlement payments.  You may have heard people tell you that you can do a better job and get a better return.  Sorry, but they’re wrong.  Unless you’re an investment expert, you probably can’t.  And if you’re looking at a “guaranteed” investment that will pay a higher interest rate, there should be alarm bells going off in your head.  In today’s low-interest environment, high-return investments are likely quite risky.  Even if the percentage you’ll earn is better than what the insurance company is using, remember that when you sell your structured settlement it will be heavily discounted.  Your fabulous new investment will have to overcome that discount rate, which will likely be in the double digits.

Your structured settlement was meant to protect you, not to be a cash register.  Your reason to sell needs to be incredible for the sale to be worth it.  Be brutally honest with yourself about why you want to sell.

If you need help selling your structured settlement, annuity or lottery payments,
contact us today. We are here to answer your questions and help you obtain the
highest possible price for your payments.


24
Feb 11

Structured Settlement Pitfalls

The old saying is that anything that can go wrong, will.  No matter how careful you’ve been with the sale of your structured settlement, the unexpected can derail your transaction.  Here are some things to be aware of.

Not So Fast.  Don’t let any structured settlement buyer promise to turn around your sale in less than 45 days.  All states have a process for structured settlement factoring transactions, and 45 days is an absolute minimum.  Some states can take months.  If you need your money in a couple of days, it is too late to consider selling your structured settlement.

Change of Plans.  Structured settlement buyers are in business to make a profit, and may change their minds if they decide buying your return isn’t in their best interest.  For example, some buyers will put a generous offer out there to get you to bite, only to cut it down later, or decide they don’t want to sell after all.  Be prepared to resist high pressure to get you to accept a subsequent offer much lower than the first, or the addition of new fees that you didn’t agree to.

Delay.  When you checked out prospective buyers of your structured settlement – and hopefully you did this by checking the Better Business Bureau – you may have noticed that other sellers complained that buyers intentionally delayed the process.  This happens when a buyer is trying to manipulate the return on his investment.  If you find that the buyer is having unexpected delays or not communicating with you, consider other options.

Sorry, We’re Broke.  Believe it or not, some unscrupulous structured settlement buyers have entered into contracts to buy structured settlements, followed the process all the way through, only to claim that they were broke when it was time to pay up.  If this is really true, an honorable structured settlement buyer will release you from your agreement, but these bad guys won’t.  There’s no crystal ball, but your vetting of structured settlement buyers should lead you to the Better Business Bureau, and you should look specifically for complaints of this nature. 

The Court.  All states have a structured settlement factoring transaction process which typically includes approval by a judge.  You may even have to appear in court to talk about why you need the money and why selling your settlement is the best option.  Even so, if the judge decides that the transaction is not in your best interest – usually because the discount rate is too high for his liking – he can nix the entire deal. 

The final show-stopper is you.  All states provide for a cooling-off period in which you can change your mind about the transaction.  So if, even after all that work, something just doesn’t seem right, you can walk away.

If you need help selling your structured settlement, annuity or lottery payments,
contact us today. We are here to answer your questions and help you obtain the
highest possible price for your payments.


23
Feb 11

Structured Settlement – Fact vs. Fiction

If you’ve been swayed by all the promises in those late night ads telling you to sell your structured settlement , read on.  You can’t always believe what prospective buyers say.  Here are some of the more likely promises you’ll hear.

Get Your Money Now!  “Now” is a relative term.  No matter where you live, and no matter what you’re promised, all states have laws that govern the process of selling a structured settlement, and the are specific steps that must be followed.  Depending on where you live, the sale will take at least 45-60 days from beginning to end, and can take even longer in some places.  Before agreeing to sell, become familiar with your state’s process to avoid a nasty surprise.  Beware any buyer who promises a turnaround sooner than 45-60 days.  If you need your cash sooner than that, you need to find another option.

We Pay More!  Well, maybe, but unless you compare offers among several competing buyers, you don’t really know how good their offer is.  Use a site like QMAP to solicit bids from several buyers, then do some comparison shopping.

Also, be on the lookout for companies that change their offers after the contracts are signed.  Part of your due diligence should include checking the Better Business Bureau for complaints against potential buyers, and many buyers have allegedly changed, or tried to change, their offers after the initial deal.  Sometimes a company will float a higher offer to get your business, only to change their minds later.  Or, they might pull the plug on the entire deal if something more lucrative comes along, or if they decide they’ve given you an offer that’s too high.  Alternatively, they might float a low offer in hopes that you’re so anxious for a quick sale that you’ll take it.

And always know that a buyer will pay you far less for your structured settlement than you would have received over time.  Buyers use a discount rate, often in the double digits, to decide what they’ll pay for your settlement.  So give serious thought to whether selling is your best or only option.

No Hidden Fees!  You should get a full and detailed description of the offer up front.  Plenty of structured settlement sellers have claimed that buyers took legal, processing, and other fees out of their settlements.  Check the laws in your state that govern the structured settlement factoring process to ensure you’re not paying a fee that the seller is supposed to pay.

If you need help selling your structured settlement, annuity or lottery payments,
contact us today. We are here to answer your questions and help you obtain the
highest possible price for your payments.


21
Feb 11

Your Structured Settlement and the Time Value of Money

If someone offered you a choice between $1,000 today, and $1,100 one year from now, which would you take?  Most people would take $1,000 today.  How is it, then, that money you have in your hand now is worth more than some future promise of more money?

There are a couple of reasons.  One is that the prices of goods and services may increase to the point that the future $1,100 won’t have the same buying power as today’s $1,000.  Another reason is that there is a risk that the promise of $1,100 in a year won’t come true. 

So, how does this concept apply to your structured settlement? 

If you are attempting to sell your structured settlement, you may have noticed that prospective buyers are offering you far less than the total amount of the payments you are trying to sell.  The buyers are using a discount rate to scale back the total amount of the scheduled payments to the amount they are willing to pay for them.  This is the time value of money in action.  Buyers use a discount rate as a way to compensate for the fact that they’ll have to wait for their money – they have to wait until your structured settlement pays out.  Buyers also want to be compensated for the expenses they’ll incur in the factoring transaction, their overhead, lost interest on the cash they’re giving away, and, of course, profit.

Meanwhile, the discount rate for you is essentially interest in reverse.  When you borrow money, you have to pay back the amount you borrowed, plus interest, right?  That interest rate compensates the lender for his expenses, the time that he has to wait to get his money back from you, and his inability to spend it or make money on it while you’re using it.  So, the discount rate is essentially “interest” that you’re paying for the privilege of not having to wait for your money. 

If this seems unfair, remember that you have the option of not selling your structured settlement.  Do you have a legitimate emergency and no other way to pay for it?  Or are you simply attracted to the siren song of quick cash?  Structured settlement buyers can charge discount rates in the double digits because they know that getting cash now, either because you need it or just want it, is a powerful incentive.  Before you sell, really give some thought to how important that cash is to you, and whether you really want to give up so much to get it now.

If you need help selling your structured settlement, annuity or lottery payments,
contact us today. We are here to answer your questions and help you obtain the
highest possible price for your payments.


20
Feb 11

The Structured Settlement Process – What You Should Know

If you have a structured settlement and are thinking about selling – or have already decided to do so – you need to understand the process that lies ahead of you.

Decide What’s for Sale.  You don’t have to sell the full amount of your settlement.  You can sell just a few of the payments that are coming to you.  Don’t let anyone tell you that you must fork over your entire settlement.

Get Bids.  Don’t just talk to one buyer, either.  Get competing bids for your structured settlement.  Sites like QuoteMeAPrice make it easy for you to post the details of your settlement, and then get competing bids from buyers.  This ensures you have the best chance  at getting a good deal.

Due Diligence.  Once you have a number of competing bids, consider the source.  A quick Internet search should produce at least a website for the company that’s made the bid, but that isn’t enough.  Visit the Better Business Bureau to see if anyone has filed a complaint against your prospective buyer.  If there are complaints, compare them to the number and type of complaints filed against other buyers.  No matter how great the offer, if your prospective buyer is being trashed all over the place for last-minute changes on the deal, or deliberate heel-dragging, perhaps you should consider someone else.

Look Over the Documents.  So now, you have chosen a buyer.  Look carefully over any documents that are sent to you.  Make sure the details in the documents match what you were offered online.  Make sure you understand every word of the agreement, and what could happen if the deal falls through; structured settlement buyers often pull out of a deal after making an offer.

Get Advice.  Your state will likely require you to get financial and/or legal advice for the transaction you’re about to undertake.  Even if you don’t want to hear what they have to say, listen.  They may have a better way for you to get the cash you need.  Or, they may point out that you have no other means of support, and so selling your settlement is a bad idea.  If these folks are on your side, you should listen. 

Go To Court.  A judge will have to approve your structured settlement factoring transaction.  Be prepared to explain why you want the money and what you plan to do with it.  Be prepared with a backup plan if the judge decides it’s not in your best interest and you need to try again.

Cool Off.  The “cooling off” period is your last chance, by law, to let your second thoughts talk you out of the deal.  Think hard about whether this is right for you.

If you need help selling your structured settlement, annuity or lottery payments,
contact us today. We are here to answer your questions and help you obtain the
highest possible price for your payments.


19
Feb 11

Checking out Structured Settlement Buyers

You’ve decided to sell all or part of your structured settlement, and – good for you – you’ve used a site like QuoteMeAPrice to compare offers among buyers.  But that’s not enough.  You need to check the buyers who’ve made offers on your structured settlement to see who might be best for you.

The simplest way to check a structured settlement buyer is to do a quick Internet search for this company.  Does the company have a website?  Is there contact information listed?  Is the website professional-looking, or does it appear to have been hastily thrown together?  Is there information available about this company at all?  If there’s nothing to be found, it may mean simply that the company is a start-up without much supporting framework.  But it could also spell trouble.

An Internet search isn’t enough, though.  It’s easy to create an official-looking website, and easy to trash another company online.  So, your next stop should be the Better Business Bureau.  You can check the prospective bidders for your structured settlement to see if there are any complaints against them.  If there are complaints, how many?  How serious are they?  Most structured settlement buyers will have at least a few complaints filed against them, so the substance of the complaints, not the mere number, is what’s important.

What exactly are other people saying about this buyer?  The most common complaints against structured settlement buyers are that the buyer did not come through with the offer that was initially made, and that the closing of the transaction took longer than promised.

To prevent getting a deal that differs from the original offer, get the contracts in writing and look them over thoroughly.  Most states will require you to get legal advice, so have your lawyer look at the contract, too.  Make sure they buyer isn’t getting any “wiggle room” to lower the lump sum price for your structured settlement at will. 

Another complaint is that structured settlement companies took too long to complete the transaction.  No matter what a buyer promises you, this process will always take 45-60 days, perhaps longer, depending on your state.  Don’t believe a buyer who promises a faster turnaround.  Also, beware that many buyers, after the process has already started, may change his mind and rescind his offer.  This usually means the buyer has found a better deal elsewhere, and has decided not to negotiate further with you.  If this happens, you’ll have to start over again, but this is probably a good thing.

If you need help selling your structured settlement, annuity or lottery payments,
contact us today. We are here to answer your questions and help you obtain the
highest possible price for your payments.


18
Feb 11

Why Should I Keep My Structured Settlement?

The ads sound incredible.  Sell your structured settlement now and get cash fast for whatever you need:  paying bills, investing elsewhere, starting a business.  But even though it may seem much less sexy to keep your settlement, there are some good reasons to do so.

Income.  One reason why structured settlements are so frequently used to settle personal injury cases is because they provide for a steady stream of income to the plaintiff.  You are guaranteed a fixed income for a period of months or years that you can use to meet everyday expenses.  If your injury has left you unable to work temporarily or permanently, the settlement is, essentially, your income.

Guaranteed Return.  Structured settlements are almost always based on annuities.  The defendant put a lump sum of money into an annuity which is invested so that it earns a fixed rate of interest.  This interest, when combined with the seed money, is able to pay out your settlement in identical payment over the course of months or years.  Don’t fall into the trap of believing that you can somehow do a better job on investing this money.  Insurance companies – who are usually responsible for administering annuities – have experts on staff with the training and time to devote themselves to investing the seed money.  If an “investment advisor” or “financial advisor” is promising they have a lead on a “sure thing” that will get you a better rate of return, walk away.

Safety.  One reason structured settlement buyers love these transactions is because of their relative safety.  Since insurance companies usually manage the annuities that pay your structured settlement, there’s virtually no risk of default as long as the insurer stays in business.  And, often, structured settlement funds are maintained in a protected fund, so payout is still assured no matter what happens.

The Whole Enchilada.  Let’s say that your structured settlement pays you $50,000 per year for 10 years, for a  total of $500,000.  If you decided to sell that settlement, the amount you get will be less than $500,000 – a lot less.  That’s because companies that buy structured settlements are in the business to make a profit, not to help you.  To ensure they make their money, they have to pay you far less than what they’ll get from your settlement over time.  If you have a truly urgent need, a real emergency that your structured settlement will solve, selling it could be an option worth pursuing.  But if there is any other way for you to get by, selling is not a good deal.

If you need help selling your structured settlement, annuity or lottery payments,
contact us today. We are here to answer your questions and help you obtain the
highest possible price for your payments.


17
Feb 11

The Structured Settlement Seller’s Decision Guide

So you’ve got a structured settlement…and a need for cash.  Sure, selling is one way to get money, but is it the right choice for you?  Here are a few tips to help you decide, and help you through the process.

How Much Money do You Need?  You don’t have to sell your entire settlement – buyers will happily take one or a few payments. 

Do You Really Need the Money Now?  Is your “emergency” for real?  Is it your emergency, or is it just a family member or friend trying to get a loan?   

Do You Have Other Options?  If you are looking to pay off medical bills or credit cards, can these debts be negotiated or cut down some other way?  What about other sources of funds for the money you need, such as a bank loan, drawing from retirement or investment accounts, or borrowing from friends and family? 

How Do You Plan to Spend the Money?  Will this cash solve a problem – such as medical bills – completely?  If so, selling your settlement might be a good idea.  But if it will pay only some of your medical bills or credit cards, and the debts are going to keep coming, selling your settlement may well be a waste of time.  And if you’re selling because there’s some great new investment that you want to make, really think twice; it’s rarely a good idea.

What Are You Giving Up?  Any structured settlement buyer is going to pay you far less for your structured settlement than you would have received over time.  The buyer applies a discount rate to the stream of payments you are selling to determine how much he’s going to give you.  Consider whether you really can give it up, and whether you really want to.

How Will You Survive?  One of the reasons structured settlements are created incident to a personal injury lawsuit is to provide the injured party a means of income.  This is especially important if the injury has left you unable to work for an extended period of time, or permanently.  If you sell your structured settlement, how do you plan to provide for yourself without those payments?  How will you pay your medical bills?  If you don’t have a good backup plan, explore other options.

This is a big decision, so think long and hard about whether selling is your best option.  Most states will require you to get legal and/or financial advice, and you should definitely do it – these folks can give you an objective opinion on whether selling is right for you.

If you need help selling your structured settlement, annuity or lottery payments,
contact us today. We are here to answer your questions and help you obtain the
highest possible price for your payments.


15
Feb 11

What’s a Good Discount Rate for my Structured Settlement?

The short answer is: whatever you’re willing to pay. 

Here’s the longer answer.  The discount rate is what a structured settlement buyer uses to roll back your stream of payments to the lump sum he is going to pay you.  You can think of it as reverse interest.  When you borrow money from a bank, you pay interest for the privilege.  When you sell your structured settlement, you are giving up a portion of it for the privilege of getting your cash ahead of schedule.  This discount rate is intended to compensate the buyer for overhead expenses, interest he loses on the cash he is giving to you, the time he has to wait for his money, and, of course, profit.

Discount rates charged by structured settlement buyers can easily be in the double digits.  Remember to shop around for competing offers, a process that sites like QuoteMeAPrice make easy.  Check each offer for its discount rate, as well as the turnaround time (how quickly you’ll get your cash) and any other fees the buyer may be trying to charge you. 

You may want to consider whether you truly need the cash, and why.  Is this a true emergency?  Is there some other way to get what you need without cashing out your structured settlement?  If it is a true emergency, ask yourself if there is some other way you can get the money you need without sacrificing your structured settlement. 

As part of the structured settlement factoring transaction (that’s the official term for selling your settlement), most states will require you to get legal and/or financial advice, and that’s a good idea.  Not only can these professionals tell you if the discount rate you’re being charged is reasonable, they may be able to present you with alternatives to selling your settlement that you didn’t know existed.

Another part of the structured settlement process will require a judge to sign off on the factoring transaction.  The judge will need to be convinced that this sale is in your best interest, and this is not a certainty.  If the discount rate is too high in the judge’s opinion, s/he may nix the deal.  However, structured settlement buyers know that this can and does happen, so they will likely keep it in mind when they make offers to you.

Even after all is signed off, there is still one final opportunity to change your mind.  Every state’s structured settlement process provides for a “cooling off” period, usually a few days, which will allow you to walk away from the deal.  Again, selling your settlement is a big decision, and you should take this final opportunity to decide if it’s really for you.

If you need help selling your structured settlement, annuity or lottery payments,
contact us today. We are here to answer your questions and help you obtain the
highest possible price for your payments.