Sell Structured Settlement

Selling your structured settlement? What You Need To Know. 
Despite the best laid plans, life situations might change and what made sense when a structured settlement was created may no longer be ideal today. While it may not make sense for everyone, some people choose to sell structured settlement payment rights for cash, to pay for a variety of expenses like urgent medical care, education and home renovations. Any number of payment rights can be purchased, in any combination and size. But it's not like an ATM, you can't just get cash today. In accordance with Federal law and state structured settlement protection acts, it is necessary to apply for and obtain court approval of the sale of structured settlement payment rights. The transaction must be in your best interest and the best interest of any applicable dependents.This transaction is defined under the Internal Revenue Code, [see IRC 5891(c)(3)(A)] as a "structured settlement factoring transaction" even though some settlement purchasing companies mischaracterized it as a "structured settlement transaction" and unfortunately contributed to some consumer confusion.

If you have reached this web site because you think you want to sell, transfer or factor some or all of your structured settlement payments, please note that our firm's primary business is creating structured settlements, as part of an overall settlement planning process, not dismantling them. The structured settlements that we create are part of a well thought out planning process which includes the participation of plaintiffs and their attorneys.

I. Some of our principles with respect to structured settlement factoring

(1) Should someone contact us with questions concerning a possible sale of structured settlement payment rights to address a liquidity need, we will do our best to understand their situation and examine alternative options. Please note that If the original case was resolved in Bronx County New York, and we participated in the placement of the structured annuity, having signed a Structure Broker's Affidavit, under the Bronx County New York Court rules designed to protect profoundly injured people, neither we (nor any other placing broker) could speak with you on the subject unless authorized to do so by the Court.

(2) Setting aside Bronx cases (or any other jurisdiction with similar rules), if, in the end, a structured settlement factoring transaction is the only viable option for the selling structured annuitant (and sometimes it really is), at the selling structured settlement annuitant's request we may:

(b) Refer them to several companies that we know, We reserve the right to charge a fee for this service, commensurate with the service provided. No fee will be charged to any annuitant where we placed the structured annuity as the broker or co-broker. In other cases, if a fee is charged it will be fully disclosed. It is believed some structured settlement brokers and settlement planners conceal that they are paid referral fees, the amount of such fees and the impact of such fees on the amount of cash the seller receives or the amount of future payments that need to be sold to pay such fees.

(3) We DON'T solicit structured settlement annuitants to sell their structured settlement payment rights. However, we encourage our own clients and others to call us if they are feeling financial pressure so we can have a chat about the situation and help them explore alternatives. We would rather you speak to us instead of giving your confidential information to one of the countless lead generation web sites that are registered anonymously and those behind them who operate in the shadows.

(4) We also DO NOT violate confidentiality or privacy provisions in settlement agreements on cases in which we have previously been invited to participate by sharing case documents with factoring, settlement purchasing or settlement transfer companies, including factoring brokers. Is there any legal exposure to the attorneys who refer structured settlement consultants or settlement planners (who end up doing so), or their clients?

(5) We DO NOT sell protected information to factoring companies, factoring brokers or list brokers.

II. Things to consider if you are thinking about selling your structured settlement payments:
(1) Is it really in your "best interest" and that of your dependents to sell your rights to structured settlement payments? The answer can be arrived at only AFTER careful thought and analysis. You need to know the answer because your sale must be approved by a judge and judicial approval is required to sell structured settlement payments. Both the Internet and so-called "unemployment TV" are full of ads that are funny and memorable. But after the laughter is over, you and your family have to live with your decision and there's no going back. Figuratively speaking, if you have life time structured settlement payments, Is it worth it to "fire yourself" or "take a pay cut" from" a "job" that you can never be fired from?

(2) Why are you in this predicament? Have you gone through a lot of your cash due to poor money management or bad investments? If so, perhaps you already benefit from the discipline, steady flow of cash and spendthrift protection that the structured settlement provides. Perhaps your situation has changed somewhat, or you have an emergency medical condition that hasn't been provided for by insurance. Have you exhausted all of your options.

(3) Avoid selling structured settlement payments if you are buying a depreciating asset
If your purpose for selling your structured settlement payment rights to structured settlement payments is simply to go shopping or take a vacation, its probably better to obtain a loan, if you can, buy on layaway, or put off the purchase of the item. A big potential mistake is trading an asset providing income with a fair rate of return for a discounted amount of cash that is then spent on another asset like a boat or sports car which is guaranteed to depreciate in value.
(4) Seek independent professional advice
If you are contemplating the sale of all or part of your structured settlement payments you should contact a settlement planning professional or a financial planner familiar with such transactions who can assess your needs. Plan ahead if you can so that you don't succumb to a desperation move. Consider the conflict of interest that may arise by simply relying on the factoring company representative for planning advice. Check their qualifications. Ask them to put in writing how long they've been doing this. What professional designations do they hold that lead you to believe that they know about structured settlements? It's astonishing that a number of them are advocating trading your structured settlement for an asset guaranteed to depreciate in value! They may also not be qualified to give this advice.

(5) Don't treat the process of selling structured settlement annuity payment rights as if you are going to a "pawn shop". Sadly we receive calls from people who sold the security and future guarantees of their structured settlements, for a discounted amount of "cash now" years ago, now wondering if there's anything that they can do to get their payments and security back. Take mama's advice and "shop around"! Don't throw your shopping instincts out the door! Many people are victimized through laziness and ignorance. A court generally will see if the effective discount rate being charged to you is reasonable. The Court IS NOT not charged with finding you the best rate.

III CAVEAT VENDITOR (Structured Settlement Seller BEWARE!)
(1) If you choose to sell part of your structured settlement payment rights, it is possible that you will no longer be able to deal directly with the customer service department at the annuity issuer. This is because some structured annuity issuers WILL NOT "split" annuity payments between the annuitant and the settlement purchaser. In such cases ALL of the annuity payments from the entire payment stream must be paid to the factoring entity (in some cases a 3rd party servicer is used) which then cashes the annuity issuer's check, keeps what is due to them and THEN pays you the difference. It has been well established by industry experts that there may be negative ramifications if the servicing company goes into Chapter 7 bankruptcy. Several leading experts have concluded that you may eventually get your money but there may be a delay and you could incur an unknown cost to protect your rights. Such unknown potential costs pose a potential risk to you because they may come at a time that you can least afford it. As cumbersome as it may seem, please make sure that you read any documents carefully and, if possible, have them reviewed independently. As you weigh the pros and cons of entering into a deal to sell the rights to your annuity payments, it's important that you compare the relative size of either the servicing factoring company or the servicing company, if different, to the company that issues or will guarantee your structured settlement if you simply do not go forward with the structured settlement factoring transaction. If the servicing company is bonded (or there a back up servicing company) you should add that company to the comparison.

(2) Your payments are already being discounted when you sell your structured settlement payment rights. One or two factoring companies is known to consistently charge a discount rate in the high teens (even when market rates were more competitive), and sellers continue to do business with them even though they've been way off the mark and uncompetitive. The cost to the seller is huge.
3) We've seen factoring companies entertain the purchase of payment rights from a structured settlement just issued! The capital loss is huge.

(4) We have seen both sophisticated and unsophisticated annuitants who are seduced by perceived investment opportunities. Before doing anything, consider the current market environment. Do you really want to trade "on time every time" for volatility or uncertainty. Consider contacting us or someone who can perform a Monte Carlo analysis , to evaluate their current and future needs and how they would be affected by the sale of payments at a discount followed by investments in equity markets.

(5) IMPORTANT TIP! Some settlement purchasers are sending mailers claiming to be what seems like a government agency. The companies are engaging in fraudulent advertising.  You do not need to register your structured settlement with any "agency" and your structured settlement does not need to be audited.

IV You also must understand the transaction. It's critical to your long term financial security.

A structured settlement factoring transaction involves several elements which can really add up:

(1) The discount rate which is the rate that the factoring company applies to your future benefit payments to come up with what those payments are worth in today's dollars Always ask for the "effective discount rate". This is the rate that takes into account all of the costs identified here in this section. It is the only way to really appreciate the cost of what you are contemplating doing and compare it. When credit is tight discount rates get pushed upward, meaning even less cash from the "cash now" pushers.

(2) The profit margin for the investor which can vary by company and transaction.

(3) The commission to be paid to the factoring company or the referrer of the business to the factoring company.

(4) Legal and Court costs to achieve a "qualified order".

V Beware Bogus Advertising

There are some established factoring companies who do responsible advertising and those that do not. Then there are individuals who factor on a part-time basis, or make money posting bogus "opinions" and "stories" which seem to relate a real life experience that prove to be little more than dubious endorsements to draw you in to the main event, which is getting you to part with long term financial security through a factoring company.

Some factoring companies falsely imply that you can simply call them up and get "cash now", "all of your cash now", "fast cash now" "immediate cash now" , "full value"and the like. The reality is that it could take months and you will NEVER get "full value" or "all of your money" if you go down that road. Note that some offer a nominal stipend that is then reflected as an offset against the funding amount when the transaction is finalized.

Plaintiff/annuitants should know that some of the issuers of structured settlement annuities, like Allstate Life and Berkshire Hathaway Life, will actually commute your annuity internally if presented with a "qualified order", so consider approaching the structured settlement annuity company as part of your research. While one tax attorney has opined that commutations might be a perilous way to go for the qualified assignee of the annuity issuer, you just may find that the commuting company''s "effective discount rate" is less than the one embodied by a third party factoring company. At the very least you should be able to use this as negotiating leverage.

Finally, if you must go down the path of selling your structured settlement payment rights, write a note to yourself, setting forth your reasons for selling, so that in the future you can be reminded why your younger self took steps that affected your financial future. It may come in useful some day.

Please contact us if you have any questions. We're here to help you better understand your options.
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