News and Tips on structured settlement transfers.

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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.

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
Mar 11

Structured Settlements – Truth Versus Fiction

The TV ads are enticing. They tell you to sell your structured settlement and get cash now! But how many of these promises are actually true?

Get Cash Now! Beware any structured settlement buyer that promises to complete the sale of your settlement in less than 45 days. All structured settlement sales are governed by state law with specific processes that must be followed. Even the fastest states will take 30-45 days to turn around your sale. If you need money sooner than that, sorry – you’re out of luck.

Get the Biggest Payment! The only way to know if a structured settlement buyer is giving you the best deal on your sale is to compare prices. A site like www.quotemeaprice.com allows you to post the details of your settlement and get quotes from competing companies, so that you know who’s offering the most money. But no matter who you choose, understand that the amount you receive will be only a fraction of the total amount of your entire settlement. Structured settlement buying companies make money by buying a settlement for pennies on the dollar.

No Hidden Fees! No matter what a structured settlement buyer promises you, be sure to read every document and agreement thoroughly for any additional costs. Your state will probably require you to get the advice of an attorney, too – make sure your lawyer is independent (not “recommended” or “preferred” by the structured settlement buyer) and has dealt with structured settlement factoring transactions before. Buyers have been accused of charging fees even though state law specifically prohibits them.

We’re the Industry Leader! There are some big players in the structured settlement market with well-known names. But no matter which buyer you choose, check them out through the Better Business Bureau to make sure they are legitimate and to see what types of complaints, if any, have been filed against them.

It’s Your Money! Yes, it is your money, but once you sell your structured settlement, it’s not your money anymore. Understand that these companies are in business to make a profit, and that they are not looking out for your best interests – that’s your job. Once you sell your settlement, how will you meet your living expenses? How will you support yourself? Do you truly need to sell? If you do sell, will your money needs be resolved, or will the same problems keep coming back? Remember that you are giving up a fair amount of your settlement if you sell, so you should give this decision serious thought.

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.

24
Mar 11

Understanding the Structured Settlement Sales Process

The ads of singing people who “need money now” seem so joyful, you want to run right out and sell that structured settlement. After all, why wait for your money over a period of months and years? And the people in those ads are so happy, the process must be easy and the right thing to do.

In fact, the sale of structured settlements is a controlled process that is governed by state law.

Structured settlements were first used in Canada some 30 years ago, but quickly grew in popularity in the United States. They are very popular for settling personal injury lawsuits, because they allow the defendant to purchase an annuity for less than the full amount of the lawsuit settlement. The amount placed in the annuity earns interest and is able to pay the plaintiff over time.

The sale of a structured settlement is called a structured settlement factoring transaction. In 2002, because the IRS and Congress perceived abuses by the factoring industry and a loss of potential tax revenue, Internal Revenue Code Section 5891 was enacted to provide a severe excise penalty for any structured settlement factoring transaction that was not pursuant to a state court proceeding.

As a result of IRC 5891, every state now has laws governing the structured settlement sales process. If you’re selling your structured settlement, it’s important that you find your state’s law regarding the process and become familiar with it. You don’t have to be a lawyer, but get an understanding of the basics. Depending on the state where you live, the structured settlement buyer may be required to pay for you to get advice from a lawyer or financial advisor, for example.

An Internet search can lead you to the appropriate statute for your state, which you can download and read for yourself. Your state’s structured settlement process likely requires you to hire an attorney to get his advice, also. Be sure to hire an attorney of your own choosing who has experience in structured settlement sales. Most importantly, don’t let the buyer of your settlement “recommend” or send you to a “preferred” attorney – s/he won’t be independent, and may not look out for your needs.

Though the process of selling your settlement may seem frustrating, it is actually designed to protect you. A structured settlement is intended to provide for your needs over a long period of time, so selling that settlement is not a decision to enter lightly.

22
Mar 11

Structured Settlement Sales – Is Bigger Better?

If you’ve got a structured settlement and are considering selling it, you have hopefully used a site like www.quotemeaprice.com to get bids for the portions of your structured settlement that you are considering to sell.

Still, once you get those bids, how do you know which to choose? Do you take a slightly lower offer from one of the big players in the structured settlement market, or do you take a chance selling your settlement to a company that is not as well-known?

It all boils down to “due diligence.” Essentially, that means you have to do your homework to make sure a company bidding to buy your structured settlement is reputable, and whether you trust that company enough to give them your business.

Once you get a short list of companies bidding on your settlement, an easy way to begin checking them out is with a simple Internet search. Are there lots of articles about them? Lots of complaints? If there is absolutely no information at all, it could mean that the buyer is a brand new company; not necessarily a bad thing, but you have no history to go on. This is all starting information, and you need to go further.

Your next stop should be the Better Business Bureau. There, you can review complaints that have been made against prospective structured settlement buyers. Most companies will have some complaints against them, so the content of the complaints should be your focus here. Do the companies change the deal after the fact? Did they fail to pay up on their settlements? Did they sneak in hidden fees? This will tell you what red flags to watch for when you begin the sales process.

Another added check might be the state attorney, or some other regulatory that handles consumer complaints, to see if your prospective buyers have encountered problems in your state.

Even once you’ve selected a vendor, be it a major player or a start-up, you can’t drop your guard. Review carefully every contract and document given to you as part of your structured settlement sale. Talk to an independent attorney who’s had experience with structured settlement sales, and talking to a financial advisor is a good idea, too. Make sure this is a good deal for you, or at least the best deal you can get. And don’t forget – you have the “cooling off” period right after the deal is done where you can pull the plug on the whole thing, if you want to.

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.

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.

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.

17
Feb 11

The Structured Settlement Seller’s Decision Guide

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

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

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

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

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

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

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

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

2
Feb 11

Getting the Right Lawyer for Your Structured Settlement Sale

Previously, we discussed a case against structured settlement giant J. G. Wentworth that alleged the company referred structured settlement sellers to attorneys, then unlawfully charged the attorney fees back to the sellers.

If you’re selling a structured settlement, you should definitely get legal advice. But how do you know whom to trust?

First, don’t let a structured settlement factoring company try to steer you toward a “preferred” attorney or refer you to attorneys in your area. Remember that a factoring company is a business; no matter how reputable they are, they are in business to make money, not to help you. You have no way of knowing if the attorney is working with the factor, or has some relationship that might taint their advice. You want to ensure the lawyer you use is independent – and on your side.

And you don’t want to use just any lawyer. Structured settlements are a specific and regulated area, and you want to find a lawyer with experience in these transactions. Your friends or family might have recommendations. If not, check one of the many find-a-lawyer websites that are easy to come by through a simple Internet search.

Once you’ve put together a list of names, give each one a little more scrutiny. Check to see the areas in which he specializes by looking at your state’s bar association or regulatory websites. You want an attorney who has worked in business-related matters, who has likely seen a few structured settlements in his time. He may be the world’s greatest tax or divorce attorney, but if he’s never seen a structured settlement, try someone else.

Narrowed down that list? Now, take the time to interview the most likely suspects. Ask them directly whether they’ve handled structured settlements, how many, and how recently. A good candidate will have seen many recent structured settlement factoring transactions, and so will have a good idea of the discount rates you’re likely to see from competing firms, and how to guide your sale through the legal process quickly. A good attorney should also come across as professional, competent, and responsive; if he can’t be bothered to return your calls, hire someone else.

Just remember that even though you’ve hired a lawyer and he is supposed to be on your side, you are your best advocate. Ask your attorney – and yourself – every step of the way if selling is the right thing for you to do. Read every document related to the sale of your structured settlement. If there’s something you don’t understand, ask. If you still don’t understand, ask again, and don’t sign until you do.

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