News and Tips on structured settlement transfers.

Notes

2
Mar 11

So You Want to Buy Structured Settlements

You’re tired of the low rates and returns available on traditional investments. You’re looking for a better place to put your money that’s not too risky. And then you learned about structured settlements, and thought about buying them. If so, consider a few things.

Got Cash? You’re going to need cash to pay off the holders of structured settlements. If you just happen to have lots of cash on hand, great – just remember that once you’ve paid the annuitant, you won’t be earning interest on the funds. If you don’t have cash on hand, how will you get access to it? What sort of interest rate will the lender charge you? Can you fit that interest into the discount rate?

Discount Rate. This is the figure at the heart of every structured settlement factoring transaction. The discount rate is “reverse interest” that you charge the structured settlement holder in order to cash them out. So, you will be paying them quite a bit less than they would have received over time. The discount rate is intended to cover your costs, as well as your profits. But don’t be tempted to make that rate too high, even if you think the buyer will accept your offer – a judge will have to approve the sale, and may not consider it reasonable.

Legal Help. The structured settlement factoring process is regulated by specific laws that vary from state to state. Unless you’re a lawyer, and very comfortable with the structured settlement process, you’ll probably want to hire one to help you draft your contracts and guide you.

Getting Noticed. There are lots of structured settlement factoring companies around, but a few big names dominate the market by their ability to advertise widely and through volume. You will need a way to get yourself noticed. A site like QuoteMeAPrice is a way to offer a deal to prospective sellers, and perhaps offering a better deal than the big guns is one way to get noticed. Still, the big players have history on their side. So, don’t expect instant success.

The Risks. Most structured settlements are administered by insurance companies, so there is little risk that a stream of payments you have assumed won’t get paid. But there are plenty of possible roadblocks that can prevent you from sealing the deal. The seller may change his mind and move to another buyer if he gets an offer for more money or faster turnaround. As noted earlier, a judge can nix the whole thing. And every state offers a “cooling off” period in which the buyer can walk away from the deal, in which case all your work and sunk costs will be lost. So, you want to buy structured settlements?

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.

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.

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.

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.

8
Feb 11

Structured Settlement Concepts – What’s an annuitant?

If you have a structured settlement, you’ve likely heard this term many times. The annuitant is the recipient of the ordered payments in the structured settlement. In other words, that’s you.

The term annuitant comes from the underlying investment that makes your structured settlement possible: an annuity.

If your structured settlement is the result of a personal injury lawsuit, the defendant likely found an insurance company and purchased that annuity. That allowed him to set aside an amount less than your total settlement inside an annuity contract that guaranteed a specific rate of return.

So, the defendant sets aside an amount of money less than the total court-ordered settlement; that’s good for him. He gives it to an insurance company who invests it in fixed-return investments in order to ensure that you will get the stream of payments promised to you as part of the settlement. The defendant doesn’t have to worry about managing the money set aside, and neither do you.

The annuity payments don’t just help the defendant, however – they also help you. By putting your settlement into a specified stream of payments, you are guaranteed cash flow to help you with your living expenses, medical bills, etc. This is particularly important if your injury has left you unable to work.

There is a tax benefit to a personal injury annuity – as long as the award relates to a personal injury, there is no tax on the payments. But just to be safe, before you sign any structured settlement, talk with a tax expert to get a solid understanding of how it will be treated on your tax return.

The annuity payments are virtually guaranteed. Yes, they are with an insurance company, and if that company goes belly-up, you might be left holding the bag. But most insurers set these funds aside in trust, so even if they bankrupt, you will still get your payment.

The number one benefit to being an annuitant is protection from yourself. Were you given thousands, or even millions of dollars, the temptation to spend it would be overwhelming. By putting that award in a structured settlement, you don’t have to worry about spending it or investing it badly. Someone else takes care of all that for you. So you can rest assured that the payment stream comes only to you.

Before you sell, take a hard look at your finances and make sure there is some other income that will make it possible for you to meet your expenses. Without the structured settlement, who will pay for you food? Rentals?

27
Jan 11

Flying By Night

So you’ve got this structured settlement. You decided to sell. You looked around for willing buyers, provided all the documents, signed all the papers, waited through all the “cooling off” periods, and now the deal is done. Your structured settlement is sold.

Only problem is, the buyer says he’s cash strapped, and won’t pay you. Additionally, he won’t let you out of your agreement to sell your structured settlement to him. So, now he has your money, but you have nothing.

This terrible scenario has actually happened to sellers of structured settlements. Reputable buyers would, at a minimum, release you from your agreement so that you still have your annuity. But there are plenty of new players in this game, investors who want to turn cash into huge returns by buying annuities. This is fine…unless they don’t have the cash to pay you.

Your first and best defense is to shop your structured settlement around to several buyers. A site like QMAP makes this easy by allowing you to publish the details of your settlement and allow the bids to come in. But in any case, don’t take only one offer, and beware taking the first offer.

Many structured settlement buyers will float a quick, lowball offer in the hopes that you are desperate enough to take whatever comes along. Try waiting awhile. You may find that that same buyer is willing to make a better deal later on.

Another warning sign is an offer that is significantly higher than all the others you’re getting. Again, this can be a lure tactic. Once you’ve signed on, the structured settlement buyer might start making excuses to lower his offer.

Due diligence is incredibly important, too. Check the Internet for complaints against prospective buyers. Check to see how many transactions they’ve accomplished. Are they established? Are they brand new to this business? If they’re a startup, this doesn’t necessarily mean they aren’t worth selling to, but you should ask about their ability to pay you for your structured settlement.

To see if any complaints have been lodged against a prospective buyer, check the Better Business Bureau. If others have reported them for dragging their feet in the sales process, changing the terms of the offer, or not paying on a sealed deal, reconsider using them.

Always protect yourself by reading every document that comes to you as part of the deal. Make sure that the initial terms don’t change. Make sure there’s nothing that allows them to delay payment to you once the deal is finalized.

14
Jan 11

Selling a Structured Settlement – Warning Signs

If you’re reading this, you’re probably giving serious thought to selling all or part of a structured settlement you own in order to gain quick access to cash. If you decide to go through with it, though, understand that the companies who buy settlements are in business to make money, and you have to protect yourself through every step of the transaction. So, consider the following list of red flags that should make you reconsider the deal.

Bad Reputation. Before you even accept an offer, you should research prospective buyers to see if they’ve racked up consumer complaints. The Better Business Bureau and/or the Attorney General for your state are the best places to find what other consumers have said about your potential buyer. The more complaints you find, the bigger the red flag.

Warp-Speed Deal. Typically, a structured settlement sale averages about 45-60 days from initial offer to closing. It can take longer than that, depending on the state where you live. If a company is promising to close your deal in just a few weeks or days, they’re likely trying to prey on your need for quick cash. They can’t keep that promise, and you shouldn’t use them.

Unrealistic Starting Offer. If you’ve used a site like QMAP to get competing offers from several structured settlement buyers, great. You should always get multiple offers. But don’t just bite at the biggest offer you get. A common complaint about settlement buyers is that the company reduced its offer after the initial contracts were signed; so, an opening bid that’s way out of whack compared to other companies may mean the buyer is trying to lure you in…and may try to pull a fast one later.

Changing the Terms. Disappointed sellers have complained – often – that as soon as the ink is dry on the initial contract, the buyer will begin whittling down his price and/or introducing fees. Yes, if you back out, you’ll have to start the process all over again with another buyer, but it’s worth not being taken advantage of.

Pressure. Like any big financial decision, beware high-pressure tactics to get you to sign a contract right away, take an offer without getting competing bids, or to ignore changes made to the initial deal after the contracts are signed. And make sure you read and understand every agreement you’re given before you sign; if you have questions and the buyer avoids answering them or just tells you not to worry, consider it a deal-breaker.

11
Jan 11

When NOT to Sell Your Structured Settlement

Turning a future payment stream into a neat sum of money now may seem enticing, but it’s a big decision. Because you will undoubtedly get less for selling your settlement than you would have received over time, many of the blog posts here on QMAP and articles all over the Web on structured settlements encourage prospective sellers to get financial and legal advice before doing so. In fact, many states require it.

But you might save yourself the trouble of consulting with professionals if any of the following conditions apply to you. If they do, you probably shouldn’t sell your settlement.

You don’t need the money. You don’t need, truly need the money for something important, such as medical expenses, staving off foreclosure, or college tuition. Even if there is a true need for the money, is there someplace else you could get it?

The money won’t completely solve the emergency. If you’re looking to pay off expenses but what you’ll get for selling your settlement won’t take care of what you owe, selling may not be a good idea. Structured settlements are designed to help you support yourself and cover your medical expenses over time, especially if you can’t work any longer. Once those payments are sold, the money is gone, and your debts remain, what will you do?

You need the money in less than 45 days. Even the fastest structured settlement sale will take 45-60 days. If you don’t have, or barely have, that much time, you may be cutting it too close.

You’re a spendthrift. Be honest with yourself. Whenever you get any money, does it immediately start burning a hole in your pocket? If you’re unsure how well you’ll resist the temptation to spend, leave that settlement alone. Again – a structured settlement is intended to take care of you. If you sell it, how will you manage?

Your spouse, kids, etc., want to spend it. Even if you’re a fantastic money manager, if you’ve got someone in the family who always seems to need money, reconsider the sale. Once they know you have cash on hand, they’re sure to want some, they’re sure to have a persuasive reason, and they’re sure to promise to pay you back. Someday.

You’re planning to use it for a risky investment. Just about everybody has daydreamed of stumbling onto that undiscovered opportunity and striking it rich. It’s nice to think that you could convert your structured settlement into a tidy seed that can be planted in the stock market, a great new business idea, or some other no-fail investment. Except that investments and new businesses often do fail. And, even if you’re lucky, will the return on that investment exceed what you’re paying (in the form of the discount rate) on the sale of your settlement? If not, better to keep what you have.

2
Jan 11

Selling Your Structured Settlement – The Process

The details of the various steps of a structured settlement factoring transaction can vary a little by state, but generally the process looks like this.

First, shop around. Decide how many payments of your settlement you want to sell and get offers. Always shop your annuities to several companies. A site like QMAP makes this process very easy. It’s important not to disclose details of competing offers to the different companies you’re comparing. Also, check the reputability of the companies you’re considering. The Better Business Bureau is a great resource; if you see lots of complaints against a prospective company, reconsider.

Once you’ve signaled your acceptance of an offer, you will have to prove that the payments you’re selling are legitimate by providing a copy of your annuity policy or other supporting documents. The seller will then send you documents that spell out the terms of their purchase for you to sign. At this point, if you haven’t already done so, it is strongly recommended that you seek legal and financial advice regarding this transaction; some states even require it. Even after you accept the offer and sign all the documents, your state will likely require you to wait out a “cooling off” period during which you can change your mind.

At this point, the transaction will have to be approved by a court. Depending on your state, you may have to appear before a judge. The judge will look at the terms of the deal, especially the discount rate used to reduce the future payments you’re selling to the lump sum you will receive. Also be prepared to substantiate the reason for selling your structured settlement, such as medical or educational expenses, legal expenses, or repayment of debt.

The court-approved transaction will be forwarded to the insurance company to document the sale of your settlement. The buyer will then advance your funds to you.

The entire process will take somewhere around 45 to 60 days, depending on the state where you live. When checking the reputability of prospective buyers, you may find complaints that the buyer took longer to process the transaction than promised, and beware that some unscrupulous companies will drag their feet. Also, at each step of the process, re-check the terms of the agreement to ensure that the seller has not changed the amount of the payment or added in any fees – this is another common complaint against buyers.

Remember that selling your settlement is a very serious decision and shouldn’t be rushed. Give serious consideration to whether this is your best option.

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