News and Tips on structured settlement transfers.

Cash

Uncategorized


10
Feb 11

Structured Settlement Show-stoppers

Even if you’re resolute about selling your structured settlement, there are plenty of reasons why it won’t – or perhaps shouldn’t – happen.

Contrary Legal or Financial Advice.  Most states require sellers of structured settlements to seek out legal and/or financial advisors to review the sale and help you determine if selling is in your best interest.  Expect them both to look at the discount rate, the rate that the buyer uses to scale back your settlement to an amount he’s willing to pay for it.  The discount rate is intended to compensate the buyer for the lost ability to invest the cash, as well as for his overhead.  But your lawyer or financial advisor might suggest not selling if the rate’s too high.  They may suggest that you can do better elsewhere, or they might remind you that you’re not in a position to make up lost revenue when your structured settlement is gone.

The Court.  A judge will have to look over the structured settlement transaction and approve it.  You may even have to appear in court, depending on the state where you live.  A judge may decide that your reason for wanting to sell isn’t compelling enough.  Or the judge may question or outright deny the transaction based on – again – that discount rate.  This happened in one case in New York in 2010.

The Seller.  When you’re looking over bids that you’ve received for your structured settlement – and hopefully you’ve used a site like QuoteMeAPrice to find competing bidders – hopefully you are checking out the companies who’ve made offers.  You may find that other prospective sellers complained about buyers who backed out of the deal midstream.  Unfortunately, this happens – the buyer may look over his offer and decide that he can do better elsewhere, or that the discount rate will fall short of the profit he wanted to make.  If this happens you will have to start over again.

You.  Most states provide for a “cooling off” period after the structured settlement sale has jumped through all of the hoops mentioned previously.  This is your last chance to think over your decision to sell and make sure you’re doing what’s right for you.  Think hard about the reasons why you’re selling.  Think about the stream of payments that will no longer be yours, and make sure you will still be able to support yourself.  Think about how the discount rate will cut into the settlement you would have gotten over time.  Finally, think about your plan to use that money, and make sure selling your settlement is the best option.

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.


5
Feb 11

Buying Structured Settlements – A Great Investment?

With interest rates at all-time lows, it’s hard to find a reliable investment with a solid return.  This is what makes structured settlements so tempting.  2010 was a great year for most structured settlement buyers…so is this a business you want to get into?

Rate of Return.  The real money from buying a structured settlement comes from the discount rate, which is essentially reverse interest that the buyer charges the seller.  It is a fee for the annuitant to get his money ahead of schedule.  Discount rates in the double digits are common, and that’s what covers your overhead and gives you a rate of return to brag about.

Caveat:  All states have structured settlement statutes that provide for the transaction to be approved by a court.  The seller – and you – may even have to show up.  A judge is going to look at the transaction and decide whether it’s in the best interest of the seller.  A too-high discount rate might doom your transaction.  In 2010, for example, a New York court questioned a discount rate of 20%. 

Cash Flow.  Borrowing is cheaper than ever, if you can secure it.  Get your hands on enough cash, for enough time, and you’ll have the ability to buy out several settlements and let the money come in.

Caveat:  Nothing lasts forever.  Should the Fed start raising rates – and a healthier economy might mean just that – the cost of borrowing will go up for you.  If you can’t raise your discount rate, something else will have to give.

Motivated Sellers.  The current economic slump has meant that many annuitants might be facing foreclosure or job loss.  A big medical bill, a car accident, or some other unpleasant surprise can make the pressure to get cash now absolutely unbearable.  These sellers are ready to go, and will likely accept whatever deal you offer.

Caveat:  Again, courts have to approve the sale, so taking advantage of distressed annuitants won’t serve you.  Besides, with services like QuoteMeAPrice at their disposal, annuitants can choose between competing offers.

The Process.  Every state has a legal process for the sale of structured settlements.  Become familiar with, and follow, the rules, and you’ll know what to expect.

Caveat:  The process also allows for a “cooling off” period for the seller; if they don’t like your deal, get a better offer, or just plain change their minds, all bets are off.  Also, an increasing number of structured settlements prohibit their annuitants from selling.  And there is always talk in the industry about new and tougher regulation in response to reported abuses by factoring companies.

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.


24
Jan 11

Truth In Advertising

It’s late at night and you’re watching TV.  On comes a funny, catchy ad, promising you “Cash NOW!”  for your structured settlement.  They’ll beat any offer!  Get a large lump sum!  No hidden fees!  So you start thinking about all the things you could do with a big wad of cash now, rather than having to wait months or years for the whole thing. 

Always remember that companies that purchase structured settlements are in business to make a profit.  This doesn’t mean that buying (or selling) a structured settlement is illegal, but it does mean that the company doesn’t make money unless it can convince you to sell.  So, take all those alluring promises with a grain of salt.

Cash…Later.  You may be desperate for cash if you’re facing foreclosure, medical bills, or mounting credit card debt.  But no matter how willing you are to sign your settlement away, you’ll have to wait for cash.  Why?  Because every state has a process that must be followed.  Completing your sale will take at least 45-60 days, and could take longer, depending on where you live.

You Can Beat That Offer With a Stick.  Even if a structured settlement buying company promises to give you more cash than anyone else, find out for yourself.  Always shop your settlement around to several companies.  A site like QMAP gives you the ability to do this quickly.  And no matter how persuasive a company might be, never reveal the offers you’re getting elsewhere – just ask what their best deal is.  Also know that many companies will float a low offer first to see if you’ll bite – if you wait, you might just get a better one.  And also beware offers that are much higher than the others you’re getting – some companies dangle a high offer to lure you in, only to drop it later. 

Not-so-large Lump Sum.  All buyers of structured settlements use a discount rate to reduce your total stream of payments to the amount they’ll offer you.  If you want quick cash, the discount rate is the “price” you’ll pay to get it.  The offer won’t be the full amount of your personal injury award, and it won’t even be equal to all the payments you’re scheduled to get.  This discount rate can often be in the double digits.  If you wouldn’t be willing to pay double-digit interest on a loan, would you be willing to “pay” it as part of a structured settlement sale?

Hide-and-Seek Fees.  A company may promise “no hidden fees,” but don’t take their word for it.  Always look over any offers, contracts, agreements, or other documents you get very carefully.  Look out for any fee, whether it’s for “processing,” “handling,” “filing,” or anything else.  Any fee will come out of your settlement sale.

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.


22
Jan 11

Before You Cash Out

So, you’re thinking that now might be the time to cash out your structured settlement.  You’ve got bills to pay.  There’s a business you want to start.  There’s an investment you want to make.  Is this a good idea?

Hopefully, you already know that selling all or part of your settlement will bring you less in a lump sum than you would have collected over time.  Maybe you’re prepared to accept that.  But, still, is it worth it?   Well, the only good reason to sell is if what you’re getting into will pay more than the settlement you’re giving up.  Consider the following situations; if yours doesn’t match any of them, you probably shouldn’t sell.

A Real Need.  It’s easy to tell yourself you really need money when you just really want money.  Money for a vacation or new gadgets is not a need.  Money to buy a new car probably isn’t a need if you can afford to repair the old one.  Money to pay for outstanding debts or medical bills might be a need, but will selling your settlement give you enough to do so?  And are you sure there’s no other way to get them paid?

Even if the sale of your settlement pays your bills, will it pay them all?  Or will more keep coming in the mail?  A sold settlement is sold, and gone forever.  If the sale won’t solve your problems in full and for all time, don’t sell.

A Backup Plan.  You probably got a structured settlement because you were injured, and the annuity is intended to take care of you – and your expenses – for a certain period of time.  Close your eyes and imagine your life without it.  Is there any other money coming in?  Do you have other savings?  If not, especially if your injuries have left you unable to work, you probably shouldn’t sell.

A Good Idea.  But you’re smarter than everyone else – you’ve got a no-fail business deal that’s going to make you rich.  Or, your financial advisor has told you about some secret new investment that will pay far more than any stocks or bonds available.  Really think about that one.  New businesses, even with the best ideas and backing, fail all the time.  And there’s no such thing as a no-fail investment.  Be particularly wary of anything a financial advisor says is “new,” or “secret,” or “undiscovered,” or anything else that sounds too good to be true.

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.


15
Jan 11

Buying Structured Settlements – The Basics

If you’ve been looking for a good investment that’s relatively secure and offers an incredible return, you may have stumbled across the purchase of structured settlements.  A structured settlement is established to pay the plaintiff in a personal injury lawsuit to ensure they have a steady stream of income over time.  However, the plaintiff often wants cash now to pay medical or legal bills, go to school, or to invest.  That’s where you come in.

You’ll need cash.  In order to pay the seller, you’ll need a cash reserve – or access to one.  You’ll need a lump sum to cover the discounted value of the settlement you’re buying.  The cash will come, eventually, but you’ll need to keep your business afloat in the meantime.

Get A Lawyer.  The process of selling structured settlements is highly regulated.  This has been the case since 2002, when too many complaints about unscrupulous vendors, and tax concerns, motivated the passage of IRC 5891.  This regulation requires each state to make rules about the sales of structured settlements.  So, the language in every contract needs to be exact, documents will have to be filed with the court, and there will usually have to be a court hearing. 

What Will You Charge?  What makes money for the buyers of structured settlements is the discount rate, the percentage by which a buyer reduces the amount of the total settlement and determines how much to pay the seller.  Be savvy when calculating this.  You need to know your operating expenses and overhead, the interest you’re paying for the cash on hand, and how much profit you want to make. 

Build Reputability.  Structured settlement sellers are smart, and know that there are uncscrupulous players all over the market.  If you make a bid on their settlement, they will research you through the Internet and also the Better Business Bureau.  You are competing with big, sophisticated players, so you may have to bid higher to get those first few references.    Common complaints against settlement buyers are changing the deal after it’s signed, or taking longer to close than promised.  You’ll you’re your business considerably by being a vendor that sellers can trust.

Not So Fast!  Part of the “qualified state statute” required by IRC 5891, in most states, is a cooling-off period.  This is the amount of time after signing a contract in which the settlement seller can back out of the deal.  So, just getting one client doesn’t mean your business is assured. The buyer can back out.  Part of the

Wait.  Yes, you purchased a structured settlement in hopes of huge returns, but this means waiting months, perhaps a year, to get cash on this deal.  In most cases, this is monthly, sometimes annually, but you will need to support yourself and your business until the money starts rolling in.

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.


15
Jan 11

Why So Many Hoops?

If you hoped to sell your structured settlement for quick cash, you may have become disappointed when you learned how many steps were involved in the process.  Collecting offers, reading contracts, getting financial and legal counseling, a cooling-off period, a court appearance.  While it may be frustrating, these procedures exist for a reason:  to protect you.

Structured settlements have been used in the United States for about 40 years.  They allow a defendant to settle a claim with a plaintiff without an enormous cash outlay up front.  Meanwhile, the plaintiff gets regular payments to help support themselves, and preferential tax treatment.

However, by 2002, Congress and the IRS realized that many structured settlement recipients were selling their annuities for lump sums.  Since there was no financial advice or court oversight, these annuitants often sold for small lump sums, then spent the full amount, defeating the financial security purpose of most annuities.  There was no safety net; just sign a contract, and all was done.  As a result, it was believed many annuitants were being taken advantage of.  There were also questions regarding the tax treatment for these sales.

In response to these concerns, IRC 5891 was born.  This new regulation required structured settlement sales to be approved by a state court in accordance with a “qualified state statute.”  If they weren’t, they were subject to a severe excise tax penalty.  In response to this new regulation, most states have passed something called the Structured Settlement Protection Act (or a similar name).  Now, most sales of structured settlements require the seller to get financial and/or legal counseling.  A cooling-off period is required, where the seller can change his mind and back out of the transaction.  And, in most states, the seller must appear in court.  Sellers should be prepared to answer questions about why they’re selling their settlements, and to explain how they plan to use the proceeds.  Courts also look at the details of the transaction, and can reject it if they believe it is not in the best interest of the seller. 

While this may seem frustrating, the point is to protect you from companies looking to turn a quick profit by preying on your need for fast cash.  Remember that annuities are designed to provide you financial security over time, so selling one should be a major financial decision.    You should always protect yourself by seeking out the best offer, and making sure that this is the best solution for you.  If selling your settlement won’t meet your immediate cash needs, or if you have no other income to take its place, you should reconsider selling.

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.


13
Jan 11

Structured Settlement Concepts – Due Diligence

In short, doing due diligence means to do your homework before selling a structured settlement.  The first thing you should do, of course, is decide if selling the settlement is the right decision for you, and how much of your settlement you plan to sell.  But the next step is to make sure you know what you’re getting into – and with whom.

You should always shop your settlement to several buyers.  QMAP is an ideal way to do this, because it lets you get quotes fast, and the buyers know they have to compete to win your business.  Although it’s tempting to look at the lump sums offered for your settlement and leap at the biggest one, it’s not wise.  What you have now is a list of prospective buyers, and you need to start checking them out. 

A simple Internet search is a starting point for checking out companies, but don’t bother with their websites that will undoubtedly show only the good news.  Specifically, you’re looking for other sellers’ experiences with this company.  Do they have a good reputation, or are there lots of reports of sellers being burned?  Also, if there’s a general lack of information about the company, it could just mean they’re a startup, but this could also be a red flag.

Of course, it’s easy to trash someone on a website or a blog, so you’re not done yet.  The Better Business Bureau collects complaints against businesses.  Check their website and look for complaints against the buyers on your list.  If there are lots of complaints, you may not want to use that company, even if they’ve given you the best offer.  A common complaint against structured settlement buyers is that they lure sellers in with a good offer, then, once the ink is dry on the contract, start reducing the offer, or introducing fees.  If you see complaints like this against your buyer, it’s a safe bet they’ll pull the same stunt with you, too.

Another source of information is the Attorney General for your state.  Many attorneys general amass and record complaints against vendors, which you can review online. 

Even if you’re satisfied with your prospective buyers’ reputations, and like the offers you’re getting, it’s still imperative to read all of the contracts and agreements very carefully.  Look for hidden fees, changes to the initial offer, or anything else that wasn’t part of the deal.  Also beware any company that promises to give you cash in a week or two – even the speediest structured settlement sales will take about 45-60 days, maybe longer depending on your state.  Finally, get advice, both legal and financial.  Your state may require it, but even if not, it’s worth your while.

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.


8
Jan 11

Why Would I Want A Structured Settlement?

You were injured by a negligent person or product, in an auto accident, or through no fault of your own.  You’ve fought for your day in court, dealt with lawyers, sifted through piles of paperwork, all to make sure the party that hurt you will pay for what they’ve done – and won’t do it to anyone else. 

And now, after all this, your lawyer is offering you a settlement.  Not the big money that you expected or deserve, but a stream of fixed payments over time.  What good is this?  What gives?

Of course, what you’re being offered is an annuity – also called a structured settlement.  Why do settlements like this happen?  Why can’t the defendant just hand you a big fat check?

There are more reasons for this than you might think.  First, and most obvious, the defendant simply doesn’t have this kind of money to give over.  So, the defendant goes to an insurance company (usually) and, with less than the settlement amount, invests in an annuity designed to pay you fixed amounts monthly or annually, over a period of time. 

You think, hey!  That’s not fair!  The defendant hurt me!  He should have to pay up now, right?  Well…there are still other reasons why an annuity for you is a good idea.

While having a huge lump sum of cash in hand right now may sound appealing, another purpose of the structured settlement annuity is that it allows you a certain measure of security in your finances.  Especially if you’ve been hurt and can’t work, the annuity allows you the peace of mind in knowing that money is coming on regular intervals, so that you can plan your medical and living expenses.  If the injured party is a minor, it gives them even further security by allowing for a financial future they would not otherwise have had.

Another great reason is that an annuity protects you from yourself.  If you’re prone to overspending, tend to buy all the latest gadgets or splurge whenever the mood strikes, an annuity prevents you from doing this by spacing out your payments over time.  It may not be fun to deny yourself, but if you aren’t willing or able to go back to work and earn a living, you’ll need something to take care of you – and that’s an annuity.

Another great advantage of an annuity for a personal injury lawsuit:  as long as it’s for a personal injury, the annuity payments are tax-free.  This prevents further degradation of your settlement.

Of course, if you have compelling emergency expenses, such as medical or legal bills, educational expenses, or something else urgent, you can sell that annuity for a lump sum of cash.  Enter the details on QMAP and find out what buyers are willing to pay you.  Then all of your settlement is in your hands, under your control, and ready to work for you.

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.


8
Jan 11

Structured Settlement Concepts – Time Value of Money

If someone gave you the choice of receiving $1 million now, or $1 million one year from now, which would you choose?

Most people would choose to get $1 million now.

That, in essence, is the time value of money.  It’s realizing that $1 million dollars now, even though the amount does not change one year from now, is NOT the same as having $1 million dollars a year from now. 

Lots can happen within a year, so why would you wait to get your money?

More importantly, if you have the $1 million now, you have the freedom to do whatever you want with it.  Specifically, you can invest it now – and let that money earn even more money for you.

That is the basic concept at the heart of selling a structured settlement.  The person who has a structured settlement doesn’t want to wait.  He wants the ability to do whatever he wants with his money now.  He may want to invest it.  It sounds perfectly logical.  The old adage “time is money” absolutely applies.  Money you have in hand now is more meaningful to you than what you’ll receive in the future.

Many companies that are in the business of buying structured settlements like to refer to the “time value of money” argument to persuade you to sell.  Why wait, when you can get – and invest – your money now?  This sounds great, but you should also consider the amount they are planning to give you for your settlement.

All buyers of structured settlements give an amount in lump sum that is less than you would have received over time.  The buyer figures out this lump sum amount by applying a discount rate to your settlement.  That means, the buyer takes the total amount of the payments he is buying, and works backward to determine the interest earnings and profit percentage he wishes to earn, in order to figure out what he is willing to give you.  This is called the discount rate.

So – what is this discount rate?  If the prospective buyer doesn’t tell you outright, there are plenty of online calculators you can use to plug in the terms of the proposed deal and figure out what percentage the buyer is using to discount your deal.  Often, this discount rate is in the double digits – the buyer is in business to cover his costs and make a profit, after all.  Besides, he is also taking on the waiting by giving you your money now.  But if this discount rate is higher than returns you could get elsewhere, and you don’t have some other compelling reason to sell your settlement, consider that you might do better investing the money on your own.

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.


7
Jan 11

Selling a Structured Settlement – What You Should Know

In case you have high hopes of turning your structured settlement into some sort of windfall overnight, think again.  There are a few things you should know.  Have a seat.

Have Reasonable Expectations.  Buyers of structured settlements are in business to make a profit.  Before they can even hope to profit, they’ve got to cover their costs:  staff costs, communication costs, legal fees, and so on.  That’s why buyers offer so much less for your settlement than the combined amount of the payments you would otherwise receive.  This is the discount rate – a sort of reverse interest rate used to scale back your annuity payments to a lump sum the buyer can afford to pay you, and still come out ahead.

Don’t be in too much of a hurry.  A typical structured settlement sale involves getting offers; providing documents to support the payment stream; getting advice from lawyers and/or financial advisers; a “cooling off” period mandated by the laws of your state; a court appearance (usually); and sending the finalized court order to the annuity insurance company.  Typically, even if everything speeds right along, this will take 45 – 60 days, at least.  If you were hoping for money sooner than that, you need to look elsewhere.

Have a really good reason.  As pointed out above, you’re not going to get more money on this deal than you would have received over time.  So, you need to have a good reason – a really, really good reason, for cashing in your annuity.  A financial emergency that can be resolved through the lump-sum of your sale might be a good enough reason.  But if you’re just looking for a one-time payment for play money, or to sink into some iffy investment, you’re probably making a mistake.

Watch out for yourself.  This is a big decision.  Even though you should get legal and financial advice before selling your settlement, and even though a court will look over the deal before approving it, you are still your best advocate.  You will still need to do due diligence on the prospective buyers, looking at how many complaints they’ve racked up with the Better Business Bureau, and determining if they’re reputable.  You will still need to read all of the contracts and agreements every step of the way, to make sure the buyer hasn’t changed terms on you.  You will still have to make sure all your questions are answered about this deal, the discount rate, all the fees you’ll be charged, and make sure you’re comfortable with your decision to sell.  Unscrupulous players are everywhere.  And even if everyone’s honest, any lawyer or financial adviser can make a mistake, so you must always look out for you.

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.