News and Tips on structured settlement transfers.

Tips

29
Jan 11

Spotting a Raw Deal

The idea of trading in your structured settlement for quick cash is enticing but can be full of pitfalls. Should any of the following warning signs appear while you’re negotiating the sale, it may be time to back off.

Your first and only offer. If you’re desperate for cash, it’s tempting to jump at the first offer you get. But if you haven’t taken the time to shop around, do it now. A site like QuoteMeAPrice allows you to put the details of your settlement out there and see what buyers are willing to pay. And there’s another reason not to jump too soon: buyers will often float a low offer first in the hope that you’ll bite. If you take your time, they might just advance a better offer rather than let you walk away.

“Don’t Worry About it.” If the offer you get is skimpy on the details, or there is anything in a document you don’t understand, ask for more information. If the prospective buyer of your structured settlement hesitates to tell you , gives you an explanation that doesn’t make sense, or just tells you that everything’s fine and you shouldn’t worry, worry! You should back out of the offer altogether, or go over the documents with your attorney to hash out your concerns.

Just a Few Tweaks. A frequent complaint lodged against structured settlement buyers is that the final deal differed from the initial offer. Beware revised agreements that the buyer says has been “tweaked,” or contains “minor” differences. The buyer may be reducing your offer by changing the discount rate, or he may be trying to sneak in additional fees that weren’t part of the deal. Again, don’t let your need for cash motivate you to sign something you don’t understand – you’ll only regret it later.

Pressure. There seem to be more and more buyers of structured settlements out there. Why? Buying your settlement promises them a virtually guaranteed stream of payments, and a rate of return far better than most conventional investments. As a result, competition is high and so is the desire for results. Structured settlement buyers know that, in this economy, many sellers are under pressure for fast cash to stave off foreclosure or cover unexpected expenses. If a prospective buyer seems to be hounding you to accept his deal, is threatening to withdraw it if you don’t sign right away, or keeps pressuring you to accept changes to the original deal, walk away.

Most states allow for a “cooling off” period in all structured settlement sales, and many require you to seek legal or financial advice before selling. All of these will help you spot a bad deal and back out if necessary. But in the end, you are your most passionate advocate. If it just doesn’t feel right, take a step back and reconsider.

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
Jan 11

Flying By Night

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

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

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

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

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

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

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

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

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

26
Jan 11

Why Wouldn’t I Sell?

It seems like a no-brainer. You’ve got this structured settlement that you were awarded as part of a personal injury lawsuit. Sure, you get regular payments, but you have to wait to get all the money that you’re due.

And then you see an ad from a company that promises fast cash to sell your annuity. You think about all you could do with a big lump sum of cash. Couldn’t you do so much more with the money now, other than waiting around for it? Why wouldn’t you sell?

You’re Going To Need It. If you were, say, 200 years old, and don’t think you’re long for this world, selling might make sense. But the whole point of making you wait for annuity payments is to make sure you don’t spend it all. If you were injured, especially if you’re now unable to work, the annuity is designed to ensure that money will be available to meet your medical and living expenses. Otherwise, you just don’t know what’s coming next.

You’re A Spendthrift. How many times have you seen a news story about some rocker or movie star who has racked up millions overnight and spent them even quicker? With all that money, you’d think they could hire an army of financial advisors to monitor their cash flow.

You don’t have millions. If any money you get seems to burn a hole in your pocket, if you’re easily seduced by ads of fancy cars or jewelry, or if you’re given to impulse buying (and lot’s of buyers’ remorse), think twice before selling your annuity. The annuity was meant to protect you – not just from creditors or medical bills, but from yourself.

You Don’t Have a Good Plan. What do you plan to do with the money you get from your structured settlement? You should already know that you will net far less in a sale than you would have gotten over time, and you won’t get anywhere near the amount of your original settlement.

Are you planning to pay off debts? If so, will the proceeds from your sale take care of your debts once and for all? Or will you still have bills to pay? Is there no other way to restructure or pay off what you owe?

Are you planning to fund a business? If so, how solid is your plan? Is this an established industry, or something new, exciting…and really risky? Even no-fail businesses do. And when you lose, how will you make ends meet?

Are you planning to invest elsewhere? If so, do the guaranteed returns on this investment beat the discount rate (the reverse interest rate you are being charged to get your cash now)? If not, this is probably a loser. The higher the investment return, the higher your risk.

Annuities are meant to protect you and meet your needs for many years to come. If it disappears, how will you manage? If you can’t answer that question definitively, you probably shouldn’t sell.

20
Jan 11

Dude, Where’s My Money?

If you’ve decided to sell your structured settlement for a lump sum, you’ve hopefully shopped it around to several buyers (if you haven’t, QMAP offers a fast and easy way to do this – try it now!). You may have noticed that the amounts being offered you are less than the total of your settlement. Why so much less?

The answer is simple: the discount rate.

A discount rate is a percentage that a buyer of a structured settlement uses to figure how much your settlement is worth now. Think of it as interest in reverse: when you borrow money, you pay the lender interest for the privilege of allowing you to use his money. When you sell a structured settlement, you are paying the buyer for the privilege of getting an up-front cash payment.

This may seem unfair, but put yourself in the buyer’s shoes. You are compensating the buyer for many things. Of course, he’s in business to make a profit. But on top of that, he has operating costs: office rent, utilities, a support staff, legal fees, and all of the overhead that goes into running a business. If he doesn’t have the cash on hand to buy your structured settlement, he has to get it somewhere, and pay interest on it. Even if he has the cash available, by giving it to you he loses the ability to earn interest on it himself.

Most importantly, because the stream of payments is not accessible to the buyer right away, you are compensating him for having to wait until the payments become available. After all, money now is worth more than money you will get at some later date.

Opinions differ on what a “reasonable” discount rate should be. In a 2010 New York court case, the judge evaluating the sale of a structured settlement criticized a 20% discount rate. Other experts set a range of percentages. The best way to determine whether your discount rate is fair is to look at all the offers you’re getting for your settlement. If one buyer’s discount rate is far higher than all the others, they should be removed from consideration unless they have lots of other good qualities. If one buyer’s discount rate is far lower, this is a red flag, too; buyers will often float a generous bid in order to get your initial commitment, only to change the terms or add additional fees later on.

If possible – and some states require it – find a lawyer or financial advisor who has handled structured settlement sales recently. See if what you’re being offered is consistent with recent events in the marketplace. This is a great way to make sure you’re getting the best possible deal.

14
Jan 11

Selling a Structured Settlement – Warning Signs

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

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

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

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

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

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

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.

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.

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.

22
Dec 10

Annuities – The Basics

An annuity is, simply, a promise to make a series of regular payments over a period of time. The annuity contract spells out the terms of this promise.

There are various types of annuities, but this discussion centers on those used for retirement or income planning. An annuity can be a great way for someone to guarantee an income for himself and prevent himself from blowing his savings too early.

An immediate annuity is created when someone uses a lump sum of cash, such as accumulated retirement savings, to purchase an annuity. The annuity will consist of payments usually made over the life expectancy of the retiree. A deferred annuity occurs when someone makes periodic payments into an annuity; when all of the payments are made, the annuity begins making periodic payments to the annuitant.

Annuities can be fixed, that is, they pay a fixed interest rate over the life of the payments. This is a very safe and conservative option, but deprives the annuitant (that’s the person receiving the payments) the opportunity to reinvest the annuity funds into an investment with a higher rate of return.

A variable annuity does not provide that guaranteed rate of return, but also allows the annuitant more control over the investments underlying the annuity – and therefore a greater chance at earning more money. Generally the annuitant (and probably his investment advisor) will choose an allocation of investments designed to generate the desired return. The annuity may also call for reallocation at periodic intervals, where the annuitant can change the underlying makeup of his investment portfolio. One downside of this more active management of the annuity funds is the fees involved with buying, selling, or reallocation of the investments.

The structure of your annuity depends on the initial investment, interest rate, underlying investments, your life expectancy, and the beneficiary arrangements on your annuity. Obviously, the longer your life expectancy, the smaller the regular payments must be. If your annuity provides for distributions to your heirs in the event of your premature death, this changes your payments too.

Also important is the financial health of the company who issues your annuity, often an insurance or investment company. If this company becomes defunct, your annuity could be at risk, so you should research and be satisfied with the issuing company’s financial stability prior to buying in.

While an annuity can be an excellent retirement planning tool, there are plenty of investing and tax issues you should consider before deciding if one is right for you. significant risks and tax issues associated with them. Shop around, and talk to a competent financial and tax planning professional before you choose an annuity.

21
Dec 10

Who Can Take My Lottery Money?

Congratulations! All of your numbers match up and you are the proud winner of a huge lottery prize! Time to start thinking about the cars, mansions, and vacations you will buy, right? Maybe not. As soon as word gets out about your newfound wealth, there are sure to be others to stake a claim.

Ex-Spouse. It’s fairly well-established that if you win the lottery while married, the winnings become joint property. Things get more cloudy, however, if there is a pre-nuptial or post-nuptial (yes, there is such a thing) agreement, or if the winning ticket is purchased after you’ve separated but before the divorce is final. Much of it depends on where you live, but the court can also take into consideration the circumstances surrounding the purchase of the ticket, the duration of the marriage, whether the marriage produced any children, and so on. Even if a court decides that your lottery winnings are all yours, your ex will likely want to revisit any child-support arrangements you might have.

IRS. Before you collect a penny of your winnings, the Feds will take their cut. If you’ve won more than $5,000, 28% is taken off the top and you will receive a Form W-2G to help you report your winnings on your tax return. If you opt for your winnings in an annuity, tax is withheld on the annuity payment each year.

State. If your state has an income tax, they will get a cut, too. Additionally, if you’ve racked up a tab for, say, delinquent child support or back taxes, you’ll have to settle up before you make that shopping list.

Everyone Else. Of course, you’ll get requests from every charity, would-be entrepreneur, relative, friend, ex-lover, and anyone else you’ve met for money. But be extra vigilant for underhanded attempts to get at your fortune. Watch out for bogus invoices from companies you’ve never heard of showing up in the mail. Collections agents may resurrect old or invalid debts and try to collect, even though they have no right to do so (they do this to people who haven’t won the lottery, too). Lots of lawyers and financial advisors will offer their services to you, but check references to make sure they’re competent and legit. And, unpleasant as it may be, think about your personal safety.

You. Plenty of lottery winners have overspent and gone broke. Think of yourself as your own worst enemy, especially if you’ve had money troubles in the past. Avoid major changes in lifestyle; a fleet of sailboats or several vacation homes might be fun to own, but the upkeep and taxes will drain your fortune, too. Get with that financial advisor you hired to set up a strict budget.

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