When to Sell Your Settlement

If you’re planning on going on a holiday shopping spree and need a little extra cash to fill the stockings, your structured settlement is not a good place to look for dollars.  However if you have gotten yourself into a situation where you are drowning in debt at very high rates, it may make financial sense to use part of your settlement to clear the books.

According to a Nilson Report, the average credit card debt in households that had a credit card was $10,679 in 2008.  According to the debt calculator at Banrate.com, if you carry that amount of debt at 13% interest (which is relatively low), making  minimum payments of $221 per month, it will take 28 years to pay off the credit card and you will pay more than $11,000 in interest.  If you have $20,000 in debt and an interest rate of 18% your minimum payments will be around $497 per month it would take 34 years to pay off this debt and you would pay more than $29,000 in interest.

Selling your settlement under some of these scenarios can save you money and ensure you keep a solid credit rating, however it is critical to note that if you are going to sell all or part of your settlement to pay off credit card debt, you must have a plan to keep that debt from creeping back up on you or it will all have been for nothing.   This requires making a future budget and possibly consulting with a financial counselor to figure out how to keep out of such a financial mess in the future.

All Debt is Not Considered Equal

You may have heard of “good” debt and “bad” debt.  While most people would prefer to carry no debt at all, there are some types which shouldn’t be a major cause for worry.  Student debt is one example.  This debt usually has a relatively low interest rate and carries some provision to postpone payments occasionally if you are unemployed or have suffered some sort of financial hardship.  Selling a structured settlement to pay student loans probably doesn’t make sense.

Another example of “good debt” would be your mortgage.  Very few people buy their home outright and selling your structured settlement to pay off manageable mortgage payments is probably not worth it.  The exception to this rule is if you are one of the thousands of Americans who entered into a shifting mortgage that now has payments that have become unmanageable or if you are facing foreclosure.  In these situations, it is definitely worth it to sit down and evaluate whether selling your settlement would save your house.  It is important in this scenario to make sure after selling your settlement you would be able to make your monthly mortgage payments, or you would be selling it for nothing.

This can all be very complicated for 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.

Happy Holidays and a Joyous and Prosperous New Year!

Thank you for Making 2009 wonderful and may the new decade bring joy and opportunity to you and your family!

We look forward to working with you in 2010, and will continue to provide superior services to all our clients.

As always, if you have any questions regarding the sale of your Structured Settlement, annuity or lottery winnings, please don't hesitate to contact us at (877) 836-4661 or info@Sovereignfunding.com

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.”

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.”

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.

Can you give me a quote?

This first step is the most critical.  It may seem obvious, but not enough people get multiple quotes from multiple brokers.  When it comes to structured settlement sales quotes can vary quite widely, so this is no time to be lazy.  Most brokers will offer free quotes online.   The quote should also be free.  If a broker wants to charge you to evaluate the price of your settlement, it’s a red flag that you don’t want to work with that person, because it is outside the norm of standard business practices for this industry.

How long is the quote good for?

This may not seem particularly important at first glance, but it is.  If someone is telling you to sell now or they may not give you what they promised they could, it is a pretty good indication that they may be eager to change the terms of the settlement somewhere down the line.  This can be very costly if you get into the process of selling, only to realize they weren’t honest.  Plus, if they are confident that they are giving you a good price they will stand by it.  If they are threatening to revoke the offer if you don’t sell immediately, chances are good they don’t want you shopping around.

What is your experience?

This is a valid and important question.  It is best to get into business with someone experienced in the field.  When selling an annuity, settlement or other product there can often be legal or contractual issues among other things.  Experienced brokers know how to deal with these and help cut the red tape to make the deal happen.

Can you assist me in figuring out how much to sell?

It is important to remember you don’t have to sell your whole settlement, but can sell partial payments as well.  Figuring out what is the best decision for you and your economic situation can be very confusing.  A good broker will consult with you to help you figure it out and will never pressure you to sell the whole thing if that is not what you want.

If I don’t sell my whole settlement, who will hold the remainder of the payments?

This is a critical question that can reveal you are dealing with the wrong broker.  When selling a partial payment, the remaining balance should stay with the original insurance company, not the company buying the settlement.  Some of the largest names in the industry do this and it is a severe conflict of interest that could hinder you from selling more later on if the need were to arise.

How long will it take to get my money?

This is another issue that can vary widely among brokers, so it should definitely be asked.  You may be surprised to find the length of time some brokers will take before you see one penny.

If you are considering your settlement, Sovereign Funding Group can help.  We are a no-pressure company that will help you make an informed decision when selling all or part of a structured settlement.  Call us today at 877-836-4661.

“The Rothstein case had nothing to do with the legitimate structured settlement industry,” said Sovereign Funding Group CEO, David Springer. “However, every time something like this happens it casts a shadow over the industry as a whole.  There are a lot of people who don’t understand the benefits the industry offers to consumers, and that legitimate firms can offer real help in guiding annuity holders through the complicated process of selling all or part of a settlement.”

Structured settlements and annuities can be sold for cash when a consumer decides it is no longer prudent to receive payments slowly, or has an urgent need for a lump sum of money.  All or part of a settlement may be sold at this time to a qualified firm or broker.

Springer says this is a good time to remind consumers about what a legitimate firm should do in terms of helping its clients. Customers should know that they can sell all or part of their settlement or annuity, and they should compare prices to ensure they are getting a good deal.   In addition, they should be aware that if they only want to sell part of their settlement they should be careful that the balance of their payment should remain with the original insurance company, not the company buying the annuity.  “This is a practice that is conducted by some of the leading names in the industry and is a conflict of interest and unfair to the consumer.  We never do this at Sovereign Funding,” said Springer.

About Sovereign Funding Group

Sovereign Funding Group is a pioneer in the purchase of structured settlements, annuities, trusts, and estates.  Sovereign Funding is committed to providing the finest services in the industry and  will provide the best possible pricing for clients’ payments and will work to get clients their money in the shortest time possible.

Sovereign Funding Group
David Springer
Toll Free (877) 836-4661
International: (410) 730-4208

There was also good news on the national economy last week.  The Gross Domestic Product expanded at three and a half percent last quarter, indicating the recession could be coming to an end.   However, all this good news doesn’t necessarily mean it’s time to sit back and relax.

The economic growth has sparked anew a debate in Washington that inflation may start creeping back into the economy sooner than later.  That could mean the value of your settlement may start changing in more ways than one.

Inflation: The Enemy of Most Annuities

While structured settlements can be a good choice for many people, inflation can really ebb away at one.  Unlike pensions, which have protection against inflation, structured settlements do not.

To put this in perspective, consider a settlement worth $100,000 in 1994.  Using calculators available at inflationdata.com, in the 15 years since that settlement inflation has risen 44.56%.  This would mean that money today would be worth $144,560.  However, because it is not scaled to inflation, it is still only worth $100,000.  That means if you had had that money in hand, you would theoretically have made more than $40,000 (assuming you had not simply spent the cash).

Buy low, Sell High

If you have been seriously considering selling your structured settlement, but holding back because with negative inflation you are in pretty good shape, you have been right.  However, if selling is seriously on your mind, it’s a good idea to do it before the inflation starts to hit.  Because when it does, the overall sale value of your settlement is likely to drop.  The trick is to get in front of the bad news, which means starting to act when things are still going well.

All of this can be rather tricky and nobody should wade through this mess alone.  At Sovereign Funding Group we will help you make an informed decision when you consider selling all or part of a structured settlement.  Call us today at 877-836-4661.

Unpredictable Times

According to the FDIC, 98 banks have failed so far in 2009.  That is compared with 26 banks in 2008.  There is no single source of clear information about insurance companies.  On Capitol Hill, the House Financial Services Committee has proposed to create an Office of National Insurance.  Such an office would be aimed at expanding access to information about the insurance sector.  In the meantime, consumers who are concerned about the health of the company that holds their annuity can check with an independent insurance rater to see how their policy holder rates. 

If it turns out that research indicates your annuity is held by an institution that is in financial trouble, it is a good idea to call the state regulators and see what sort of safety net is in place.  Then you can calmly evaluate the merits of selling the settlement versus leaving it where it is.

Staying Calm through the Storm

Panic and financial decision making are a toxic mix.  In short, if you hold some type of structured settlement, selling it in a panic based on the latest news is never a good idea and a responsible broker would not advise you to do so.  That said it is a good time to take stock of your situation.  Is your annuity your only asset?  How large is it?  These are good questions in a time of uncertainty in the financial system.  

Are All Your Eggs in One Basket?

 Most financial advisors first piece of advice to consumers is to diversify.  This can be as simple as in addition to investments, own your house or apartment.  That way there is money in both the markets and real estate.  The logic is if one sector crashes you may still have value in the other sector.  If your settlement is your only asset, you may want to split it up to reduce your risk exposure. The great thing about selling a settlement is it doesn’t have to be all or nothing.  You may sell off part of it, and in one fell swoop have the ability to diversify your assets and spread the risk around.  This could allow you liquidity to survive a time of transition in your work, go back to school, or purchase real estate in a buyers’ market.  You could still keep part of the settlement to guarantee that some type of income is still available if any of these ventures don’t work out.

This can all be very daunting to a consumer.  At Sovereign Funding Group we will help you make an informed decision when you consider selling all or part of a structured settlement.  Call us today at 877-836-4661.

If You Need to Buy a House

If your family situation has changed, or you have gone through a major relocation you may be looking at the real estate market right now.   Although it may seem daunting due to recent price plunges in markets across the country, the fact is that now that the housing bubble has popped you can actually find good deals.  Mortgage rates are at all time lows, but they are extremely difficult to obtain. The days of creative financing and low down payments are gone.  However, if you have the money to put 20 percent down, you can get great deals at some of the lowest mortgage rates in history. 

The housing market is down, but appears poised to recover. The National Association of Realtors’ Housing Affordability Index is the lower this year than in any previously published years, but it is starting to show some upticks. The National Association of Home Builders is predicting a dramatic increase in new housing and existing home sales during the next two years, also an indication prices are likely to start heading upwards.   At the same time, the NAHB is predicting an increase in fixed rate mortgages from 5.15 to 5.74 percent and in arms from 4.84 percent to 5.25 percent during the next two years.  

Consumers must simply weigh the cost of selling an annuity or settlement against paying higher housing costs and higher interest rates.  This depends on each individual’s situation and the amount they would pay on a house, but certainly could be a money saver in many cases.

A Need for Credit

If you are self employed, run a small business, or have urgent need to make a major purchase, chances are you are relying or under normal circumstances would rely on a credit card.  According to the National Small Business Association, credit cards are now the most common source of financing for small businesses. However, the availability of this source of funding is drying up or becoming extremely expensive.

Lawmakers passed sweeping credit card reforms this year that will limit the industry’s ability to raise rates and fees.  Ahead of these regulations being enacted, issuers have cut credit lines and are increasing rates rapidly.  According to Creditcard.com’s Weekly Credit Card Rate Report, the national average on credit cards is 12.64 percent and appears to be trending upward.  These costs need to be weighed against the cost of selling an annuity or settlements.

Paying for College

If you have a child, or a number of children you are expecting to send to college, this may be one of the most beneficial reasons to sell off an annuity. 

Many states now have college pre-payment plans where you can pay tuition now, and lock in the tuition rate, regardless of future increases.  According to the College Board’s Annual Trends in College Pricing Report, tuition at four year public colleges rose at an annual rate of 6.4 percent, grossly outpacing inflation year after year.  Two year public college tuitions are up 4.7 percent.  Using a lump sum to lock in tuition early can save tens of thousands of dollars.

While there may be a depth of financial information out there about the pitfalls of selling off your settlements, there are some distinct advantages as well. Like any other major transaction it pays to do your homework.   Only you know exactly what your financial situation is, but a reputable firm will work with you to figure out your needs, the costs, and how best to maximize your financial potential.   A bad economy may just translate into a good time to put your money to work.

At Sovereign Funding Group we will help you make an informed decision when you consider selling a structured settlement. Call us today at 877-836-4661.

1. Annuitant wishes to sell only part of their structured settlement
2. Factoring company offers to buy the partial payments but sale contract provides for ALL of the payments to be transferred to factoring company and factoring company then becomes responsible for paying the unsold payments to the annuitant as and when paid to factoring company (“servicing”).
3. Annuitant then is solicited to sell the balance of the payments at a later date.
4. When or if the annuitant decides to sell later, factoring company lowballs the offer and is a captive because other factoring companies are loath to buy payments being made by their competitor.

When selling partial payments, you should be aware of this practice and avoid it.

Once payments are transferred to the factoring company you lose the benefit of an A-AAA rated insurance company being responsible for making the payment to you with all of the tangible benefits associated therewith and become dependent upon the factoring company to make the payment to you. Also, you lose the benefit of being able to have factoring companies compete for any subsequent sale because many companies may not want to rely on a competitor to pay them.

At Sovereign Funding Group we only take assignment of those payments which we buy, entitling you to receive the balance of the payments directly from the insurance company as originally bargained for.

Please exercise caution when reviewing a sales contract. If you would like a second opinion, please call us at 877-836-4661.

Sovereign Funding Group would have offered a net price of $39,802.00 for the same set of payments.

This case represents another example of how important it is for prospective sellers to get a price quote from Sovereign Funding Group before making a final decision to sell.

Sovereign Funding Group offers the best price upfront and routinely makes offers in the 8% to 9% discount rate range.

Please give us a call to get a second opinion. Call us toll free at 877-836-4661.

1. Make a low ball offer and test whether the seller will accept or shop for a better price.

2. If the seller shops and receives a better offer they will make a counter offer higher than the highest offering price and drag the completion of the case out several months so as to recover the lost profits through interest drag.

Interest drag is the widening spread between the fixed purchase price payable to the seller and the floating sale price set at transaction completion with the investor or securitizer. This spread can be significant, and sometimes more than $100.00 per each day that the transaction remains uncompleted. If a case is dragged for an extra 2 months, that would amount to an extra profit of $6,000.00 due to the factoring company.

Unfortunately this tactic is employed by many structured settlement factoring companies.  As a first line of defense make sure that the company that you are obtaining a quote from are members of the Better Business Bureau and have no complaints.

At Sovereign Funding Group we deplore such tactics. We not only offer the best price upfront to the seller but we also offer a Closing Guarantee* whereby if a transaction takes longer than 8 weeks to close we will guarantee the per diem interest drag by way of a additional payment due to the seller at completion of the transaction.

At Sovereign Funding Group we explore all of your financial needs and help you to make the best informed choice with no pressure an no games! Call us today at 877-836-4661.

*Certain conditions apply. Please contact us for more information.

The following three recent cases illustrate our mission in practice:



*Information supplied by sellers

The sellers in both the FL and GA cases agreed to sell to us.

The NY case is the widely publicized Ciemielewski case that was recently denied by the court. We never bid on that case. Our price reflects the sale price that we would have been prepared to pay had the seller contacted us.

At Sovereign Funding Group we explore all of your financial needs and help you to make the best informed choice. Call us today at 877-836-4661.

Each structured settlement sale and transfer requires court approval. Each state has a different test that the court must apply to determine if a sale ought to proceed. These tests range from “best interest of the annuitant taking into account the welfare and support of the annuitant’s payees” to “imminent financial hardship”.

In determining whether or not to sell, the annuitant should consider the following:

1. What are the immediate financial needs including family needs?
2. What are the assets and net income available to service these needs?
3. What is the shortfall, if any?
4. Is there a substantial asset (such as a car or house) that needs to be bought in order to maintain or improve the individual or family’s standard of living?
5. Are there medical, school, or other expenses currently due or will be due in the future unfunded by current resources?
6. What is the ability to obtain conventional financing and at what rate?

If there is a current cash need, if that need cannot be financed at rates in the range of 7 to 7.5%, and even if you can get financing if it cannot be serviced at current income levels, then it is likely appropriate to sell your structured settlement at this time.

Other circumstances may make it sensible to sell now:

1. You have investment opportunities at rates of return greater than 8% per year.
2. You have inherited the structured settlement and do not need the payment stream.
3. You no longer have the same needs that were present at the time the structured settlement was arranged.

At Sovereign Funding Group we explore all of your financial needs and help you to make the best informed choice. Call us today at 877-836-4661.