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25
Dec 11

Buy My Annuity Payments

There are lots of different ways to fall into an annuity. Some people receive them as compensation for years of work. Others receive them through settlement plans from some lawsuit or potential lawsuit. Others still purchase annuities as a means of investment. When you get the annuity, you almost always think that you will be fine with collecting the money slowly over time. But circumstances can change. Life is such that things are almost always changing and you might need the money right away instead of over the course of time. If I wanted someone to buy my annuity payments, I would need to weigh the decision and make a proper determination first and foremost.

Should I get someone to buy my annuity payments?
This is largely a loaded question. My situation and your situation are likely to be different. If you find yourself in a place where a lump sum of cash would do a great amount of good, then it can make sense to sell your annuity payments to a company that is willing to offer an acceptable lump sum. If you have some investment idea or some pressing need for the money, then you would be wise to get someone to buy your annuity payments for cash right now. Before you make this decision, you need to analyze whether or not it makes sense to you.

In order to do that, one must first understand the time value of money. The basic fundamentals of economics tell us that money right now is better than money in the future if the amount is the same. This is because of all the things that you can do with the money. Inflation is such that the same amount of money now will be worth less in the future. Likewise, if you have investment possibilities, then you could potentially make the money grow at a rate that makes sense. These are things that you will need to think about as you decide whether or not to sell your annuity payments.

Selling your annuity payment rights
You might have guessed by this point that the company that buys your annuity payments will pay a discounted price for them. That is how they make money. Whether or not it makes sense to make this sacrifice ultimately depends upon the price you are getting. You will have to sacrifice something to get the money up front, but you shouldn’t give up too much value. A smart consumer will shop around and settle on the best possible annuity buyer. Some companies are very good at giving you a lump sum quickly. Do your research and work with a reliable, reputable company if you are going to sell your payment rights.

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30
Apr 11

Why You Need Objective Advice Before Selling Your Structured Settlement

Structured settlement factoring companies – the buyers who take your payment stream in exchange for a lump sum – are in business to make money.  They are not in existence to help you, and they are not on your side.  This doesn’t mean they are evil; it simply means they are in business.  As a result, it’s important that you look out for your best interests before you agree to sell your structured settlement.

Get Advice.  First, if you can, tell a trusted friend or a financial advisor that you are considering selling your structured settlement.  Another person may be able to give you objective suggestions for other ways that you can get the cash you need, or meet your financial obligations, without selling.  A financial advisor may also be able to help you get alternative financing, or work with you to restructure your debts to something more manageable.  Even though financial advisors charge a fee, it may be well worth it, considering how much you will give up if you sell your structured settlement.

Watch Out For Pressure Tactics.  While selling a structured settlement is new for you, it is just another day for the structured settlement buyer.  They know the hopes and fears of structured settlement holders, and may try to play on your emotions to get you to sign on for a deal in a hurry, or agree to a deal that is not the best for you.  Avoid this kind of pressure.  If possible, get a friend to be with you whenever you are dealing with the structured settlement companies to give you a second opinion, and get you to hold off before signing in a hurry.  If you don’t have anyone who can serve in this role, promise to wait at least 24 hours before making a decision – write it down and post it prominently if you need to.  Tell the company that you have a financial advisor who must look over every aspect of the deal, even if you don’t really have such a person.  A company may try to convince you that the deal will be off the table if you wait; this is even a greater red flag to back away. 

Get Legal Advice.  Most states require structured settlement holders to get legal advice before selling their structured settlements.  Choose an attorney who is independent (avoid any attorney who is “preferred” or “recommended” by the structured settlement buyer) and who has experience with structured settlement factoring transactions.  Listen carefully to his or her advice.  If s/he tells you that selling is a bad idea, reconsider your decision to sell.

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23
Apr 11

Before You Sell Your Structured Settlement, Read This!

If you’re desperate for cash, the ads promising quick cash for your structured settlement can be really tempting.  But keep a few things in mind before you decide to go ahead.

Think of What You’re Giving Up.  All structured settlement factoring companies use a discount rate to figure up what they will pay you for your settlement.  That means that the lump sum you will get in exchange for the payment stream you’re selling will be less than the total amount of the payments – sometimes a lot less.  The discount rate ensures that the structured settlement buyer’s costs will be covered, and also that he will make a profit on the purchase of your settlement.

What Will You Do When It’s Gone?  Once you sell your structured settlement, it’s gone.  Structured settlements are intended to provide for your living and medical expenses, so without it, how will you cover your needs?  If you have no other income and are not able to work, seriously reconsider how you will survive without your structured settlement payments.

Do You Really Need To Sell?  It’s easy to become convinced that you are desperate for cash when a large expense pops up.  But really consider what those expenses are.  Is there some other way to get what you need, or pay the bills?  If it’s a debt you wish to pay, try restructuring it or working out a payment plan.  If it’s something you think you need to buy, reconsider whether you really need that new car or vacation.  Even if you really need money, if selling your structured settlement won’t take care of the need once and for all (for example, if it’s only enough to pay some of your debts), don’t bother – you’ll be no better off and your structured settlement will be gone.

Not As Easy As You Think.  Beware structured settlement buyers who make the process sound fast and easy.  Even if everything goes smoothly, you won’t complete your sell in less than 30-45 days.  If you need cash faster than that, you are out of luck – no matter what the settlement buyer promises you.

The most important thing to remember is that a structured settlement is intended to protect and provide for you.  Structured settlement buyers are in business to make a profit, not to help you.  Before you sell, really give some hard thought to what your life will be like without the settlement payments.

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12
Apr 11

What Can Derail Your Structured Settlement Sale

Plenty of things can go wrong when you’ve decided to sell your structured settlement, and may even cause the sale to be cancelled altogether.

Change to the Deal.  Once you’ve chosen a buyer (hopefully you’ve shopped around on a site like www.quotemeaprice.com) and decided on a lump sum you will receive for the sale of your structured settlement, the buyer may try to change the deal.  This is a common complaint against structured settlement buyers, and should be a red flag to you to walk away.  Same goes if the buyer tries to introduce new fees that weren’t part of the deal to begin with.

Advice.  Your state’s laws will likely require you to get legal and possibly also financial advice from a professional.  This is meant to be an objective opinion as to whether the sale of your settlement is in your best interests.  If the lawyer or financial advisor counsels you against selling your structured settlement, they can’t stop you from proceeding, but you should seriously consider their advice.  They may be able to help you resolve whatever financial problems have caused you to consider selling, or help you come up with other options for raising money.

Foot-Dragging.  Structured settlement buyers are frequently accused of intentionally slowing down the sales process.  They may do this if they are trying to time their investments, if they’re trying to secure the cash that they will use to pay you, or if they are considering other deals. 

Naysaying Judge.  One of the final steps in the structured settlement factoring process involves putting your proposed sale in front of a judge for his or her approval.  The judge may review the sale and conclude it is not in your best interest to sell, especially if the buyer is charging a discount rate that the judge believes to be excessive. 

Cool It Down.  Even after the entire process is completed, you will still have a “cooling off” period during which you can choose to nix the entire deal.  This is your last chance to think hard about whether selling is right for you.

No Payment.  As terrible as it may seem, there have been instances in the past where a structured settlement factoring transaction was completed, but the buyer was short on funds and did not pay the seller.  If this happens, a reputable company should cancel the agreement, but there have been companies that have refused to cancel the agreement.  The end result is, the seller gave up his settlement and got nothing in return.  Your best defense against this is to do due diligence – thoroughly check out any prospective buyers to see if they’ve done this in the past.

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9
Apr 11

Why Selling a Structured Settlement Takes Longer than You Think

The ads all promise “cash now!” but the truth is, the sale of your structured settlement is going to take quite a bit longer than that.

The process of selling your structured settlement will take, on average, 45-60 days to complete, depending on which state you live in.

Why the delay?  After all, isn’t it your money?  Aren’t you giving permission to sell it?

The answer is, it’s the law.  All states have statutes governing structured settlement factoring transactions.  As a result, there is a strict process that must be followed, and specific steps, often with specific waiting periods.

After you choose a buyer for your structured settlement (and hopefully you’ve used a site like www.quotemeaprice.com to shop around for the best deal), there will be paperwork for you to review and sign, and send back to the seller.  This is one reason for the delay.  Your state may also require you to get legal and possibly financial advice regarding the transaction, so you will need even more time to find these professionals and sit down with them to review your sale.  State processes require this so that you will get independent advice as to whether the transaction is suitable for you, and in your best interests.  Even if your state doesn’t require you to get this advice, you should do it anyway. 

Once all the contracts and agreements have been signed, and you’ve gotten professional advice, your structured settlement sale will need to be approved by a judge.  Depending on your state’s law, you may even have to appear in court.  So, this takes more time to get your court date on a docket. 

Once all this is done, most states grant a “cooling off” period during which you can change your mind and cancel the entire deal if you want to. 

While this may seem frustrating, especially if you need cash in a hurry, the entire process is designed to protect you.  Structured settlements are intended to provide for your needs over a period of time, so selling it should not be a light decision.  State processes are also designed to ensure that you get objective opinions (lawyer, financial advisor, and judge) as to whether selling your settlement is a good idea, and giving you the opportunity to think it through one last time.  So, no matter what a buyer promises, don’t expect to get cash at light speed.

Annuities / Factoring Education / Sellers / Structured Settlements / Tips — No Comments
3
Apr 11

Common Complaints Against Structured Settlement Buyers

With all the ads featuring happy people singing about getting cash now, you could easily come to believe that the process of selling your structured settlement is easy and worry-free.

You need to protect yourself, however, because people who have gone through the process have complained of potential pitfalls.

Going Back on the Deal.  A typical complaint that is levied against structured settlement buyers is that the buyer changed the amount of the offer through the purchase process.  Many buyers will float a low offer first, just to see if you’ll bite.  Don’t jump at the first offer, and you might just get something better later on.  Buyers will sometimes back out of a deal altogether, presumably if they’ve found something they think is a better investment, or if they’ve run the numbers and decided their offer to you was too high.  If the company does go ahead with the deal, always read all documents and agreements carefully to make sure the buyer doesn’t change the amount of the lump sum payment he originally offered.  If the buyer starts playing tricks with the numbers, walk away from the deal.

Promises Not Kept.  Don’t be lured in by the happy promises made by structured settlement buyers in their ads.  Many buyers will promise to give you the best deal, but the only way to know for sure is to shop around.  A site like www.quotemeaprice.com makes this easy, so that you can post the details of your settlement and let buyers compete for your business.  Also beware any company that promises a settlement in fewer than 45-60 days.  No matter what state you are in, and no matter how easy the process, a structured settlement sale will always take at least that much time.  Remember that there are agreements to sign, a court process to follow, and legally-mandated “cooling off” periods.  It will take time.

Where’s My Money?  Unfortunately, some companies enter into agreements to buy a structured settlement, but come up short on cash and don’t pay the seller.  A reputable company will release the seller from this agreement, but some companies have actually refused to do this – so the seller not only was out of his structured settlement, he was never paid for it.  Sneaky Fees.  You shouldn’t have to pay court fees or processing fees to sell your structured settlement, so beware any company that tries to pass these on to you.  Again, read all contracts and documents carefully, and have an idea of the fees prohibited by your state’s structured settlement statute.

The best way to make sure your prospective structured settlement buyer won’t pull any of these dirty tricks is to check them out at the Better Business Bureau.  You can see what other sellers have to say about these companies.  If you find that some of them have pulled dirty tricks, think carefully about using them.

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29
Mar 11

Cashing Out My Structured Settlement – How Much Will I Get?

In their ads, structured settlement factoring companies promise cash fast.  They may also promise to beat all other offers.  But, realistically, how much can you expect to get when cash out a structured settlement?

Well, if you had visions of getting a huge lump sum for your structured settlement, you should revise your expectations.  You will likely be quoted a lump sum that is far less than the total amount of the payments you were scheduled to receive.  The reason for this is the discount rate.

Structured settlement buyers cash out settlements for less than the full amount in order to compensate for what the time value of money costs them.  By giving you cash, they don’t have the cash available to invest elsewhere.  If the buyer had to borrow the cash used to buy out your settlement, he is paying interest on that loan.  Because he has to wait for the scheduled payments to arrive, he also has opportunity costs – the money is unavailable to spend on some other, potentially more lucrative opportunity.

The discount rate is the buyer’s valuation of these costs.  And, in addition to compensating him for lost opportunities, the discount rate is designed to compensate him for his operating costs, such as office expenses, employees, and legal expenses. 

There is no “typical” discount rate that you can expect a structured settlement buyer to charge.  Often, the rate is in the double digits.  There also is no standard as to a “fair” discount rate – it is essentially what you are willing to tolerate in order to get a lump sum of cash quick.  Your structured settlement factoring transaction will have to be approved by a court, however, and it is possible that a judge may refuse to grant permission for the sale to continue if he believes the discount rate is too high, or that the structured settlement sale is not in your best interest.  

But don’t count on a judge as your only measurement of the fairness of the sale.  You should still get legal and financial advice (your state probably requires it) and get an objective opinion about whether the transaction is right for you.  In addition to looking over the sale, he may be able to direct you to other options for getting the cash you need that you may not have considered.

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26
Mar 11

How to Get Good Advice for Your Structured Settlement Sale

If you’ve decided to sell your structured settlement, then you’ve learned that your state has a process for making sure the sale is approved by a court and is in your best interest.  But how do you really know if you’re doing the right thing?

Most states require you to get legal advice, at a minimum.  Some states also require that you get financial advice.  Even if your state doesn’t require either of these things, you really should consider them both.  A good lawyer and/or financial advisor can take an impartial look at the structured settlement sales deal and let you know if you’re doing the right thing.

Whichever you choose, make sure that the lawyer and/or financial advisor you choose is someone you found on your own.  Many complaints against structured settlement buyers allege that the buyers steered sellers to a “preferred” or “recommended” provider of legal or financial advice.  Unfortunately, in these scenarios, the lawyer or financial advisor is partial to the seller, and can’t be trusted to give you independent advice.

Check the regulatory agency for lawyers in your state.  You’ll be able to see lawyers in your area and the practices where they specialize.  You want a lawyer familiar with financial law, bankruptcy law, or structured settlement factoring transactions.  It’s the same with financial advisors.  A good FA might present options for your financial woes that you never considered before.

Regardless of whom you choose to work with, you are your own best advocate.  Do an internet search to find the structured settlement factoring law for your state.  Download that law and read it.  Become familiar with its provisions.  You may find that it requires the structured settlement buyer to pay fees for which he is trying to charge you; if so, fight back.  If there’s anything in the statute that you don’t understand, don’t be afraid to ask questions.

The buyer of your structured settlement will make lots of money on your transaction, so you should carefully decide if selling is the right decision for you, and if the buyer you’ve chosen is giving you the best deal.  The way to do that is through solid, independent advice.

Marketplace / Sellers / Structured Settlements — No Comments
19
Mar 11

Structured Settlement – Your Best Bet

You were injured and filed a lawsuit, or you won a lottery, or some other settlement, yet your benefits are being paid to you as a structured settlement.  Why do you have to wait for your money?  Why can’t you get it now?

Structured settlements actually got their start in Canada.  They’ve become a favorite in personal injury lawsuits for a number of reasons. First, the plaintiff can pay a settlement to an insurance company that is less than the actual total lump sum settlement stipulated in court.  How?  Because the plaintiff puts a set amount of money aside with an insurance company, who then invests that money into a conservative investment whose rate of return generates the stream of payments that constitute your annuity.  The time needed to grow that lump sum into your annuity is one reason why you have to “wait” for your money.

Another reason is your benefit.  Structured settlements are intended to cover your living expenses for a period of months or years.  Most people don’t have the discipline or investment skill to manage such a large amount of money on their own.  So, the annuity lets someone else (the insurance company) manage the money, and the annuitant (that’s you) gets it – and spends it – only as needed.  No matter what a “financial advisor” may tell you, you won’t beat the interest earnings on your investing without some special skill…or divine intervention.

Tax-free treatment is another big reason that structured settlements are so popular.  As long as your damages come from your actual injuries, and not from compensatory or punitive damages, your annuity payments are tax-free.  So, take that into consideration if you believe that your investment can overcome the return on your structured settlement.  Anything you earn must beat both the insurance company and your tax rate.

If you truly don’t need this money, great – why not play with investing it elsewhere?  But if you got it as a result of a personal injury settlement, and can’t replace that income elsewhere, selling should be your last resort.

Should you decide to sell, a site like www.quotemeaprice.com allows you to seek out bets from interested buyers quickly and easily.  Buyers will tell you the amount they are willing to pay for all or part of your structured settlement.  This allows you to get the best deal.  True, you won’t get anything close to the amount you would have received over time, but if you are desperate for cash, you will be able to get more than if you called only one buyer.

Annuities / Factoring Education / Sellers / Structured Settlements — No Comments
18
Mar 11

Structured Settlement – Cash It Out?

The late-night ads beckon, promising a big lump sum settlement if you cash out your structured settlement.  You’ll get cash now, or so they promise.  Consider a few things before you sell.

How Will You Spend the Money?  You may think that you have a serious emergency on your hands that justifies selling your settlement, but do you really?  If you’re paying bills, can they wait?  Or can they be negotiated?  If you’re paying for repairs, is there any other way to take care of it?  If you’re giving the money to friends or family, can’t they get the money anywhere else?  Sometimes, with enough hard thought, you’ll find that money “emergencies” really aren’t.

I Can Beat that Interest Rate.  Your structured settlement is likely being managed and paid by an insurance company, who received a lump sum (perhaps from a defendant in a lawsuit) and is investing it in conservative investments so that you will receive guaranteed payments over several months or years.  These investments are likely very conservative and not earning a high rate of return, and you may have had financial “consultants” tell you that you can do better.  The truth is, however, that you probably can’t, at least not without taking on a huge amount of risk.  Also consider that your structured settlement is tax-free.  If you sell it, and invest the proceeds, any money you make won’t be tax-exempt.

How Long Are You Planning to Live?  Structured settlements are typically intended to provide the annuitant (that’s you) with a stream of income to meet your living expenses for a period of months or years.  If you sell your settlement, that income will be gone.  How do you plan to take care of yourself, especially if you don’t have a spouse to do it for you, or if you can’t work. 

How Disciplined Are You?  Selling your structured settlement will result in a lump sum of cash at your disposal.  This isn’t necessarily a good thing.  Even the most disciplined person would have difficulty resisting the temptation to spend a large amount of cash right away.  Even if you’re disciplined, there’s sure to be a family member or friend with some “urgent” need that can be met with a “loan.”  If you don’t have control over the money – that is, if it’s still locked into an annuity – you don’t have to worry about saying “no” to a seemingly legitimate need.

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