News and Tips on structured settlement transfers.

Structured Settlements

12
Jan 11

Why It Pays to Shop Your Structured Settlement

You’ve got a structured settlement and you’re ready to sell it for cash now. You’ve found a willing buyer and the offer’s not bad. So, why not go right ahead?

Like buying a house, a car, or making any other major financial decision, you should always compare your options if you’re looking to sell your settlement.

The main reason should be obvious: making sure you’re getting the absolute best offer for your settlement. If a prospective seller knows he has no competition, there’s no reason for him to offer you more. A site like QMAP is great for putting the details of your settlement out there, and letting prospective buyers come to you. Since they know they’re competing with other players in the market, they’ll make offers that are worth your while.

Another reason, though, is to let you compare the details of every deal. The discount rate buyers are using will affect the lump sum you’ll get for your sale. You’ll also be able to see whether any of the buyers are trying to charge you additional fees that will cut down on the total amount you’ll receive. You can also compare the time frames in which the buyers plan to complete the transaction. Typically, a sale will take some 45-60 days to close if all goes smoothly, but companies can vary.

Sometimes a prospective settlement buyer will float a lowball offer in hopes of getting you to bite. If you shop around, however, you have the option to turn him down and go elsewhere. Once rejected, that prospective buyer may come back with something even better. Remember, though, that you should never disclose details of offers you’ve received to other prospective buyer.

Having a sampling of prospective buyers to choose from also gives you the option to check the reputations of each of them. Checking the Better Business Bureau will let you see if the company has any complaints against them. Even if a buyer has offered you the most money, if they’ve racked up loads of complaints, reconsider using them. Disappointed sellers may have complained that the transaction took longer than promised, that buyers charged hefty or hidden fees, or that buyers changed the terms of the deal midstream.

One final reason to have a list of prospective buyers: things can change. Sometimes a prospective buyer will make an offer only to retract it before closing the deal. If this happens, you’ll essentially have a Plan B in the form of other willing buyers.

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.

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.

4
Jan 11

Three Killer Reasons to Buy Structured Settlements

Frustrated with the low interest rates available on conventional investments? Looking for a different way to make money? Interested in a better way to maximize returns at the lowest possible risk?

If so, consider buying structured settlements.

A structured settlement occurs when a plaintiff in a personal injury lawsuit (usually) is awarded a large sum of money for their injuries. Because the defendant usually can’t pony up that kind of cash in a hurry, he buys an annuity from an insurance company. This allows the plaintiff to get a certain number of payments of a fixed amount over a period of time.

But, sometimes, the annuitant needs a lump sum of cash up front, usually for medical expenses or some other financial emergency. When this happens, s/he may sell some or all of the payments to which she has been given the annuity. This is called a structured settlement factoring transaction, and here’s where you come in. Why buy such a thing?

Return on Investment. Structured settlement annuitants who are looking to sell need cash fast, and so are willing to accept a much smaller lump sum than the combined amount of all their payments. The discount rate – which you use to determine what you will pay the seller in cash – can get up to the double digits. This sets you up for an enormous rate of return over time, provided you have the ability to wait for the payments.

Steady Payments. Since the annuity payments are coming from an insurance company, the risk that you won’t get the payments you have bought is pretty low. As long as the insurer stays in business, you’re set.

Recessionary Economy. In the current economy, people are facing all sorts of financial difficulties, and these are what motivate sellers of structured settlements. Loss of a job, spouse’s loss of job, impending foreclosure, a need to go back to school, or medical expenses for the annuitant or a family member, are all reasons that an annuitant might be looking to sell his structured settlement at a deep discount.

What Buyers Should Know. This isn’t a risk-free investment for you, either. You’ll need cash to make the payment. Since this is a highly regulated transaction – nearly every state requires prospective sellers to get financial advice, and to wait out a “cooling off” period – you’ll need legal help, and there’s always the risk the seller could change his mind, or that the court might balk, before the deal is finalized. But even one successful deal might make it all worth the trouble.

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.

31
Dec 10

Selling Your Structured Settlement Online Now

You’ve got some kind of a structured settlement – maybe from a lawsuit, maybe from winning the lottery, maybe a note secured by a mortgage or a business.

But it’s just sitting there. Your next payment could be months away. You need cash now. What can you do?

Thanks to sites like QMAP, you have access to a fast, easy online marketplace where you can shop your note or settlement to willing buyers to come up with the best deal for you. So – what’s next?

Put out the details of your settlement arrangement, and what you want to sell. You can sell all of the future payments if you want, or sell only a few of them. It really depends on how much cash you need. Using a site like QMAP, you can list the details and get offers from interested buyers.

Shop Around. Like the song says, don’t be sold on the first offer. Every buyer of structured settlements is different. There are some firms who do a high volume of business and have well-known names in the business. Others might be small or start-up businesses looking for a return on your structured settlement. Some firms may start out with a low offer, only to come back with a higher one when you say no. Remember that when you sell a structured settlement, you will receive less in a lump sum than you would have received altogether over time. This is how companies make money – and how you get the cash you need right now.

Fees. Buyers of structured settlements are in the business of making money on the difference between your total payments and the cash they pay you now. But the buyers incur costs in doing so; they have overhead (office staff, communications expenses), legal fees, court fees, and the interest cost of getting access to the cash they will use to buy your note. As a result, the deal you’re offered may include varying amounts of fees. Each offer should be up front about the fees that will come out of your lump-sum settlement.

What’s the Money For? Annuities, particularly those entered into as part of a personal-injury settlement, are intended to support the annuitant for a period of time. The buyer of your settlement is looking to turn a profit, however, and is not concerned with why you want the money or how you plan to spend it, or how the loss of this annuity will affect your personal finances. However, the court may have to review and approve the sale of your settlement, and will want a compelling reason for the sale of your settlement. Don’t be vague. If you want to sell, you should have a good reason to do so, such as a compelling financial emergency, college tuition, or a solid business or investment opportunity. Be prepared to substantiate your reasoning.

30
Dec 10

Why Companies Purchase Structured Settlements

If you’ve got a structured settlement as the result of a lawsuit, or winning the lottery, you may be visiting a site like QMAP to consider the possibility of selling it for up-front quick cash. But what motivates the companies that buy the settlements?

Investment Return. The most compelling reason for a company or investor to get into the structured settlement purchasing business is the potential for huge returns on their investment. Consider that these companies buy all, or part, of the stream of payments you have been guaranteed for just pennies on the dollar. The goal for the purchaser, of course, is to get that lump-sum payment as low as the buyer will accept. The result can be returns substantially greater than any investment on the market.

Security. Once the structured settlement sale has been agreed to and approved, the buyer is virtually assured to get the stream of payments he has purchased. Most structured settlement annuities that result from lawsuits have been set up or purchased through insurance companies, so as long as the insurer is creditworthy and likely to stay in business, there is virtually no risk to the purchaser that he won’t get his cash flow later. Installment payments for lotteries, paid by the government, are even more secure.

Fees. In addition to the return on investment that the purchaser will receive, they can also cover their upfront costs by charging a fee as part of the structured settlement sales transaction.

Getting into the Business. Of course, the purchaser of the structured settlement has a pretty full plate. To get into the business of purchasing structured settlements, the company must have quick access to cash. If the settlement purchaser does not have the cash on hand, he must somehow secure it elsewhere – this means a cash advance on which he will have to pay interest. He’ll likely also incur legal fees getting help with the purchase contract, navigating the court system, etc. There will be overhead, too – office staff, communication costs, and so on. All of this is a substantial up-front investment for a new company in the structured settlement business.

The sale of a structured settlement will have to be approved by the court. Because the court and the seller will want to check the structured settlement buyer’s reputation, it may be difficult for a start-up to compete with bigger, established names. Also, if there has already been substantial work put into finding the seller, figuring up an offering price, and drafting the sales contract, only to have the court refuse to approve the sale, those costs are sunk. Still, even one successful purchase of a structured settlement can cover of that and make an immediate profit.

18
Dec 10

Finding the Right Financial Advisor

Virtually every post here has recommended that a prospective seller of a settlement, lottery award, or mortgage note seek the advice of both legal and financial counsel. You can open the phone book to “Accountants” “Financial Advisors,” or “Financial Planners” to get a list of names, but this isn’t enough to find someone qualified to help you.

References. Talk to people you know about how and where they get financial and investing advice. Find out what types of services they got from the professionals they hired; optimally, you want someone who handles your type of settlement on a regular basis. If you have a settlement as a result of a lawsuit, your attorney might have suggestions, but you should evaluate their recommendations with the same critical eye as any other.

Professional Associations. Accountants and financial advisors often belong to professional associations, such as the American Institute of Certified Public Accountants or the National Association of Personal Financial Advisors. Find your local chapter for these organizations and talk to them. Ask about members who’ve handled your type of situation before.

Beware. Beware of financial advisors who work on commission, or who work solely with one or two investment organizations. Beware any accountant or advisor who guarantees investment returns and glosses over the risks. If they’re anxious to get their hands on a large sum of cash, they may be too eager for you to sell your settlement, rather than give you objective advice about all of your options.

Fees. Many financial advisors work for “fee-based,” “fee-plus-commission,” or “commission-based” compensation. This means that they earn a commission or the products or services they sell you. While this is legal and doesn’t mean the advisor is dishonest, it may lead him to steer you toward the products that will earn him a commission. By contrast, a “fee-only” financial advisor doesn’t work for commission; you will pay him directly for his services. While this means a cash outlay up front for you, it also means he has no incentive to lead you toward a particular product and may give you more objective advice.

Certifications. Look at any professional designations your prospective advisor has. Designations such as CPA (Certified Public Accountant) or CFP (Certified Financial Planner) indicate that the person has certain levels of education and/or has passed certification exams. Ask the prospective advisor about his qualifications. If he has a professional designation, check to make sure the designation is still active and good standing. For example, you can check with your state’s regulatory agency for Certified Public Accountants to ensure a CPA has a valid license.

The Interview. Most importantly, talk with your prospective advisor on the phone or in person. Get the details about his qualifications, and determine whether his areas of expertise meet your needs. Ask about prior experience with your type of settlement. Ask him specifically about relationships with investment and insurance companies, and how you can be sure that his advice is independent and objective.

11
Nov 10

Five Important Steps Before You Sell Your Structured Settlement: Introduction

With so many companies promoting selling all or a portion of your structured settlement, you may find yourself considering this option. Whether your structured settlement is the result of a worker’s compensation claim, personal injury, or property loss, the option to convert your structured settlement to a lump sum could becoming increasingly more attractive as a means to meet financial demands. Unfortunately in today’s economic climate, many are resorting to options they might not otherwise have considered. Before making the decision to sell your structured settlement, it is important to arm yourself with the necessary information to allow you to make the best decision possible for your circumstances. As with most things, there are both advantages and disadvantages to structured settlements. One of the advantages is that the settlement guarantees a specific amount to be paid over a period of time. This not only protects you from rapidly depleting the settlement, but it also provides a dependable revenue stream over the course of the settlement schedule. Conversely, the disadvantages include the inflexibility of not being able to access the money when you need it and the loss of potential investment returns.

Prior to 2002 the tax benefits of a structured settlement benefited both the company making the payments and the recipient as the payments made were tax free. In order to protect the injured party, Congress granted these tax benefits to structured settlements as a means to keep the injured from prematurely depleting their recoveries. In order to prevent the factoring transactions from undermining the policy objectives of the structured settlement, Congress passed HR2884 which resulted in Internal Revenue Service 5891 requiring all structured settlement factoring transactions be approved by a state court. The Structured Settlement Protection Act imposes a 40% excise tax on the net sale of a structured settlement that does not meet the requirements of the state and federal statutes. All states with the exception of Vermont, North Dakota, Wisconsin, and Wyoming have passed legislation regulating the buying and selling of structured settlements. Over the next five posts, we will be discussing five steps that are essential before you commit to sell a portion or all of your structured settlement.

Do your due diligence
Seek legal advice
Seek financial advice
Decide what you are going to sell
Seek the best offer

10
Oct 10

What to Look For in a Company When Selling a Structured Settlement

You hear the term “structured settlement” practically every day. Most often it will be in the context of selling it to certain companies.

Keep in mind that the purchaser is looking to make a profit. Your goal is to get the most money possible. Go slow in deciding when and to whom to sell. Do your research, take bids and insist that certain terms and rights be met. It is your money. You are in control. If the amount of the offer and the conditions of the deal don’t make for a fair exchange, look elsewhere.

Remember, you don’t have to sell the entire settlement. You can sell just a portion if you prefer.

Here are steps you can take to protect yourself and ensure you are getting the best deal:

1. Have an idea of what your structured settlement is worth, keeping in mind a fair discount rate. This discount is where the company’s profit comes from and why they are willing to purchase. If this doesn’t meet your expectations then maybe selling isn’t right for you at this time.

2. Make sure the company you’re considering is legitimate. As with any other business, the Better Business Bureau is an excellent place to start. You will also want to do a web search for complaints against the company. An easy way to do this is to just “google” the name of the company followed by the words “complaints” or “reviews”.

3. Don’t rely on the integrity of any one company. Get multiple quotes. Don’t share the offered amounts with the other companies who will be giving quotes. You don’t want a previous offer to be a factor in new bids. This is also a good way to weed out the not-so-good companies. If someone offers a ridiculously low offer they probably do not have your best interest in mind. Conversely, if someone offers an unreasonably high offer, this is suspicious as well. It’s fairly common to offer the highest initial bid and then do a series of stalls until the client is desperate to take a much lower offer.

4. When it is time to write the agreement, be sure it is laid out the way it was discussed.

5. Have a definite closing day. This varies by state, but eight to twelve weeks are normally sufficient. Insist that there are penalties in place such as an additional payment per day, due to you on closing, if the settlement company fails to close on time. It is possible for them to stall so they earn some extra interest on the money while they make you wait.

6. Know your rights. There are laws in place to protect your interests. Although it may seem like a nuisance, you will need to go through the court system in your state to have the settlement approved. This is for your protection.

Cashing out a structured settlement is a big financial decision so go slowly and plan carefully.

26
Sep 10

What is the Basic Process Followed to Cash in a Structured Settlement?

Individuals receiving payments from a structured settlement often need to convert the settlement into a lump sum payment for immediate expenses. There are many companies in the business of purchasing structured settlements in exchange for cash.

No matter how desperate a seller may be for cash, it is important to understand the basic process involved in cashing in a structured settlement. Despite the hype seen on television and written in print advertisements, selling a structured settlement is a multi-step legal process that can take 90 days or longer to complete. It is allowable in only two-thirds of all states. Many settlements are structured in a way to prevent any option of a sale at all. Some agreements, while allowing the possibility of a sale, make the sale process so difficult or cumbersome to complete, that the option is prohibitive or woefully inadvisable.

Assuming that sale is an option, the basic process is as follows:

The annuitant, (Owner) of the settlement selects a buyer. After sending details of the settlement to the buyer, the buyer makes a preliminary offer. If the owner is satisfied with the quoted offer;
The owner sends the requested copies of the settlement agreement, underlying annuity contracts and other supporting documentation to the buyer. Then;
The buyer sends a contract and disclosure agreement that states the terms and conditions of the contract and agreement in the offer to the seller. Once signed;
The contract, related agreements, and supporting documents are submitted to a court for approval. The evaluation process and subsequent issue of an order of approval can take up to 90 days or longer. Once approved, money can be available within 5 to 10 business days.

Deciding to cash in a structured settlement is a serious matter. The seller is best served by seeking the advice of legal and financial professionals qualified to assist the seller in making an informed decision. Converting a structured settlement has permanent consequences for the seller and his or her dependents. Selling a structured settlement strips away the benefits of that continuous stream of income. Long-term settlements are built to provide continuous income to individuals with permanent or chronic disabling conditions. Perspective sellers should carefully consider the consequences of removing this long-term financial safety net.

If a sale is truly necessary, the seller should, at a minimum, check the track record, financial stability and integrity of a potential buyer. Not all offers are equal. A prudent seller will shop around and compare several offers to find the right fit.

Let Companies Compete to Buy your Structured Settlement!

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News and Tips on structured settlement transfers.

Structured Settlements

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