Late last week Senator Richard Durbin (D-IL) spoke to the National Structured Settlements Trade Association. He criticized pay-day loan companies for preying on desperate people and charging exorbitant fees which leave them with nothing.
Senator Durbin also cited examples of interest rates as high as 358 percent being charged by pay-day loan operators. “The same is true for factoring of [structured settlements],†said Durbin. There are certain practices we just shouldn’t be afraid to say are wrong.â€
At Sovereign Funding we couldn’t agree more that these practices are wrong, but we also don’t believe all financial services companies should be lumped together with the worst practices of pay day loan companies. There is a stark difference between a responsible financial services firm that is willing to purchase your settlement, annuity or lottery winnings and the loan companies Senator Durbin so colorfully refers to as “reptiles.â€
Individual Choice
Some of the politicians on Capitol Hill are fond of embracing colorful extremes because it gets them good press. The idea that structured settlements are wonderful tools to protect people who have been injured is true. However, the idea that every holder of a structured settlement is incapable of making informed financial decisions and therefore should not sell or even be permitted to sell their settlement is not an idea with which we can agree.
Every household has their own unique situation and America was founded on the idea that they should have the freedom to make their own choices. There are many instances when selling a settlement may make sense for the holder.
Normal Transaction Fees vs. Highway Robbery
The examples Senator Durbin sites underline the reason anyone selling a structured settlement should get quotes from several companies before they consider selling all or part of their settlement.
There is a fee involved in the sale of a settlement because the financial services firm is taking on a certain amount of risk. However, that said, no one in their right mind should sell an asset at a cost of 358 percent and we would not advise a client to do so.
Top Three Settlement Sale Pre-Cursors: Quotes, Quotes, and more Quotes
Even if the math seems too complicated to figure out exactly what percentage of your settlement is being taken in fees, getting multiple quotes should help make sure you aren’t being scammed. If the quotes are generally in line with each other, chances are they are reasonable. If there is a wide range of prices, someone is trying to take advantage of you.
Regulatory Protections
It is also important to note that the federal government and all but three states have laws that govern the sale of structured settlements. Court approval is required for the sale of a structured settlement in order to protect consumers.
If you have any questions about selling a settlement or annuity, we would be happy to talk to you. Sovereign Funding Group is a no pressure company that can help you make an informed decision when selling all or part of your structured settlement. Call us today at (877) 836-4661.
