News and Tips on structured settlement transfers.

Sellers

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.

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.

16
Mar 11

What Happens to a Structured Settlement if I Die?

It’s not a pleasant thought, but if you have a structured settlement, you may have wondered what would become of those payments if you should head to the Great Beyond.

The short answer is, it depends on how your settlement was designed.

If your settlement is set up so that it pays only while you, the annuitant, is still alive, then there will be nothing for your beneficiaries if you should make an early exit. Not surprisingly, this would be the structure of choice for defendants in a personal injury lawsuit, because it ends their liability if the annuitant dies. However, as you might expect, plaintiffs usually want more flexibility than this.

Another option for a structured settlement is to have the payment stream be fixed over a certain period of time or a certain number of payments. This may be called a “guaranteed period” or “period certain” because, even if the annuitant should die, the payments continue until the specified period comes to an end. If the annuitant is no longer alive, the remaining payments go to his/her beneficiary, or his/her estate if no beneficiary has been specified.

Yet another possibility is to structure the settlement to pay a “joint and survivor benefit.” In this case, the payments go to the annuitant, but, in the event s/he dies, the remaining payments go to a specified “survivor.” This would usually be someone like a spouse or child. Like the guaranteed period, it ensures that the structured settlement will be paid in full, even if the annuitant does not live that long.

Finally, your structured settlement may contain a “commutation rider” which provides for a designated beneficiary to receive a discounted lump sum payment in lieu of the remaining payments if you should die. Typically, the commutation rider will call for the beneficiary(ies) to get 90% of the remaining settlement if the annuitant dies; this is more than the beneficiary would likely get if s/he sold the payment stream to a structured settlement buyer.

So, should you sell your structured settlement now in order to make more money for your beneficiaries? Well, hopefully you and your lawyer had a long conversation about your anticipated needs before you even agreed to the settlement. But, even so, selling it is a major decision. If you should die, remaining payments made to your beneficiaries are generally tax-free. It’s difficult to discipline yourself from spending the entire lump sum if you sell, and any interest you earn on the investment of the funds is taxable – not tax-free, like your structured settlement.

Hopefully, you will enjoy a nice long life with your structured settlement payments. But take a look at your settlement agreement so that you understand what will happen if you’re no longer around.

13
Mar 11

Structured Settlements and Kids

Unfortunately, bad things don’t just always happen to adults. When a child suffers a terrible injury and a lawsuit follows, the end result might be a structured settlement.

When the plaintiff in a personal injury lawsuit is a child, the court usually will put part of the settlement into a blocked bank account designed to pay current and future expenses. This bank account will remain restricted until the child reaches the age of majority (usually 18). Lawyers’ fees and other expenses will also be paid from the settlement. If Medicaid was used to pay some of the child’s medical expenses, they may also have a claim to part of the settlement (check with your lawyer about this). The remainder is placed into a structured settlement. Since a minor child cannot legally enter into a contract, the process of making the settlement binding is called confirmation, court approval, guardianship, or minor’s compromise proceeding.

Just like for adults, a structured settlement is typically a lump sum that is placed in an annuity that will invest the money then make a stream of payments to the annuitant (in this case, the child) over time. The idea of the structured settlement is to ensure that the child has a stream of income to meet his needs for months or years. This might be a lifetime if the child is permanently and totally disabled. Parents and attorneys for the child should review any proposed structured settlement carefully to determine if the amount of the settlement will be sufficient for the child.

But what if circumstances change and you need cash sooner than the annuity will provide it? It is possible to sell a child’s structured settlement, but it’s more difficult than selling one that an adult controls.

Structured settlements for minor children will often have a no-sale provision designed to prohibit its sale in a factoring transaction. Even with a no-sale provision, however, a court can approve a structured settlement sale if it can be demonstrated that there is a great an immediate need for the cash, and that the child’s needs are better met by selling the settlement than waiting for the next payment. You can expect, however, that the court will scrutinize a claim like this very carefully.

Once your child reaches adulthood and gains control of his settlement and that restricted bank account, the temptation to spend it all now will be immense, and it’s tough to expect an 18-year-old to have the maturity to know that he’ll need the money later. At this point, the best gift you can give your child is solid financial advice, maybe even the services of a financial planner, to help protect him when you aren’t around.

8
Mar 11

Structured Settlement Sales – Understanding the Process

How does the sale of your structured settlement work? Here’s a quick summary of what you can expect.

First, find a buyer. You can use www.quotemeaprice.com to get competing buyers to bid on your settlement. You don’t have to sell your entire settlement; you can sell a portion or just a few of the payments you have coming to you.

Check out the bids you get, paying attention to all the details. You want the best lump sum, but watch out for any extra fees. Do “due diligence” by checking out the reputations of the prospective buyers. You can do this by going to the Better Business Bureau’s website and looking at what kinds of complaints, if any, have been submitted against the buyers. If you see lots of complaints alleging that the companies changed the original deal, snuck in lots of fees, or didn’t pay the lump sum as promised, these should be red flags. Also, beware any buyer who claims to be able to complete your structured settlement transaction in less than 45-60 days; all states have a legal process that must be followed, and it will take at least that long from start to finish.

Once you’ve picked a buyer, pay close attention to all of the contracts and paperwork you receive. Look for any changes to the original offer, and check the fine print for additional fees. If you don’t understand something, ask. If the buyer doesn’t sufficiently answer your question, tells you not to worry about it, or starts pressuring you to sign, you should walk away.

Most states require structured settlement sellers to get legal and/or financial advice. Make sure you find a lawyer who is independent – don’t take the buyer’s recommended experts or accept referrals from them – and who has handled structured settlement transactions before. Specifically, the lawyer should evaluate whether the sale is in your best interest, and should make sure the buyer isn’t trying to pass on fees to you that state law says he has to pay.

The sale of your structured settlement will have to be approved by a judge, and you may even have to appear in court for this. If the judge believes that the sale is not in your best interest, s/he can refuse to approve it, and you’ll have to start over again if you still want to sell.

Finally, you’ll have a “cooling off” period after the sale is approved before it is finalized. This is your last chance to re-think the whole thing, and decide once and for all whether you truly want to sell.

7
Mar 11

Who Would Buy a Structured Settlement?

Sure, you know why you want to sell your structured settlement – an emergency need for cash fast that can’t be settled any other way. You may not like the idea of having to wait for your money, and at times like this, it can be pretty inconvenient. So, why would a company want to buy your settlement from you?

Stability. A typical structured settlement is backed up by an annuity, usually administered by an insurance company. If your settlement was related to a personal injury lawsuit, the defendant placed a lump sum with the insurance company, who then put the funds into an annuity contract where they money would be invested in conservative holdings so as to generate a stable stream of interest. That interest income, plus the initial sum, pays out to you over months or years. Barring financial disaster for the insurance company and your annuity contract being unprotected, the company who buys your settlement is virtually guaranteed that the stream of payments he is buying will come through as planned.

Rate of Return. If you’ve been shopping your structured settlement on www.quotemeaprice.com already, then you’ve found that buyers are offering you lump sums that are less than the total amount of your payment. This difference is being caused by the discount rate. It is essentially a reverse interest t percentage that the buyer uses to scale back the payment stream to an amount he is willing to pay you. The discount rate is intended to cover the buyer’s costs, such as legal fees and administrative overhead, but it also contains his rate of return – his built-in profit. After all, structured settlement buyers are not in business to provide funds to you, they are looking to make money. If this seems unfair to you, remember that you are in need of quick cash and the buyer is essentially providing a service. Also, just as if you were borrowing money from a bank that would charge you interest, there is a charge for getting your money ahead of schedule.

Here’s the good news for you: a site like www.quotemeaprice.com allows you to get several offers from competing buyers, and lets you choose the one that best suits your needs. Of course, you don’t have to accept any offer, and you don’t have to sell your settlement if you don’t want to. That’s why you should always weigh the decision to sell heavily, and get objective advice.

3
Mar 11

Three Reasons to Keep Your Structured Settlement

Those ads sure are tempting, especially late at night when you’re tired and prone to worry about all of the needs you have. Selling may seem like the right idea, but here are some good reasons to stick with what you have

A Structured Settlement is Stable Income. One of the reasons structured settlements are so popular for settling personal injury lawsuits – and so popular with buyers looking to invest – is that there is virtually no risk of not receiving your payments. Insurance companies invest the lawsuit proceeds in conservative investments designed to earn interest so they can pay your settlement as promised. The structured settlement buyer is risking little more than his time and some attorney fees to draft and structure the sale. Meanwhile you risk plenty if you let that settlement go. How will you support yourself, especially if your injuries have left you unable to work? How will you meet your expenses without the annuity?

The Sale Won’t Go as Planned. Yes, the ads say you’ll get cash “now” or “fast,” but these are relative terms. If you truly need your cash that fast, a structured settlement sale won’t help. All states have laws governing structured settlement factoring transactions, and all of them take a minimum of 45-60 days to complete the entire transaction. Some states can take months. And there’s always a chance your deal will hit a roadblock: misfiled paperwork, miscommunications, slow mail, etc. Any of these can stretch out the approval process. And remember that, even if all goes smoothly, a judge can nix the deal if s/he doesn’t think it’s in your best interest.

You Can’t Make up the Difference. Your friends and family may tell you that you can certainly earn a better return than what the insurance company is putting toward your annuity. They may be telling you that the insurance company isn’t an investment company, and doesn’t know what it’s doing. You can beat that, they say. Truth is, the folks that insurance companies have investing the funds usually are experts who deal in investments every single day. You may see higher interest rates, but they are more risky and there’s a chance you could lose everything while chasing a few percentage points. And don’t forget that, when you sell, the buyer pays you far less than you would have received over time. They do this by discounting your annuity. This discount rate covers the buyer’s costs and guarantees his profits. If the discount rate is in the double digits, can you truly overcome that deficit with your investments? Unless you’re the next Warren Buffett, it’s not likely.

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.

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.

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.

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News and Tips on structured settlement transfers.

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