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Introduction
Before we begin, I want to help you understand the truth about structured settlements. Technically, you do not own the annuity that funds your structured settlement payments. All you own is the “RIGHT” to receive those payments. This may sound confusing, but it is to your benefit. It all has to do with the IRS rules that make structured settlement payments tax-free.
So if you don’t own the annuity, who does? In most cases, the annuity itself is actually owned by a company that is, in turn, owned by an insurance company. The company that owns the annuity tells the annuity issuer (usually a life insurance company) to make the annuity payments to you. Confused? I hope not. Rest easy.
The important thing is that even though you are not the owner of the annuity, the law now allows you to sell your “RIGHT” to receive some or all of those future payments—IF a court approves.
For those into technical things I have written a report entitled “Understanding your Structured Settlement” that I give to the attorneys and their clients. It explains the legal and technical mumbo-jumbo. Just call or e-mail me and I will send it to you.
Anyway, the reason I include this section is to let you know that if you decide to sell some or all of your future payments, the insurance company, the company that owns your annuity, and the courts all need to be involved.
Before Selling Your Structured Settlement Payments For Cash
1. Broker or Direct Funder? Suppose someone calls or writes and offers to buy settlement payments. Or you see a TV commercial or find someone advertising on the Internet. First question to ask yourself: Are you talking to a real ‘funding company,’ the company that will seek court approval and provide the cash when the court order is entered? Or, are you just talking to a middleman who is going to pass you on to another company and pocket a big markup. The Internet is full of “brokers” who advertise “cash for settlements,” cash for private mortgages, cash for everything. In reality, many of those Internet storefronts simply take your name and information and sell it to a real funder. What do these middlemen cost you? They may say their services are “free.” Do you believe that? The simple truth is that when a funder pays a middleman, that leaves less for you — the actual seller. Dealing with a middleman could cost you thousands of dollars. Remember, of the hundreds of companies advertising “cash for settlements” on the Internet, only a handful are actually direct funders.
On the other hand, there are legitimate brokers who will work for you. They understand the legalities involved and have access to the funding companies. These brokers get paid a commission for their services, but if you do not want to spend the time researching funding companies then it may be worth it for you to work with a broker. As always, you must do your homework and check out the broker you are considering to represent you. The same rules apply for legitimate brokers as with consultants who work directly for the funding companies: They should show you that they have your best interests at heart.
Many of the brokers who work with me will send their clients to this website. They want their client to get as much education as possible. If your broker referred you here then it’s very likely that you have found a good one.
2. Specialization. There are complex rules and regulations governing the purchase and sale of structured settlements. Failing to follow the complex rules or failing to present your situation clearly and persuasively to the judge could result in delay. Or rejection. These transactions should not be entrusted to amateurs or mass-production mills. Is the person you are dealing with a professional who focuses on the purchase of structured settlements for cash? Any real funder will have a full-time staff of in-house attorneys and paralegals who process structured settlement transactions in courts around the country and a network of local-counsel with a track record of getting deals done.
When it comes time to sell, everyone wants their cash “fast.” But the reality is that the process takes time. A court has to approve the sale. No reputable company can “guarantee” what a court will do or when the court will act. If someone guarantees you “cash in a month,” watch out! They are just telling you what you want to hear in order to get you to sign their contract. Remember, if they lie to you in the beginning’’!
3. Your Best Interests There are many good reasons for selling your future payments and receiving the cash now. Legitimate reasons would include buying a home or a car, completing your education, starting a business, paying off your credit cards with their high interest rates, or paying unexpected doctor bills. But if you need to keep getting monthly money from your settlement to pay for on-going medical needs or food or rent, then you need a plan that takes that into account. Remember, once you sell your future payments for upfront cash, there’s no going back. Maybe the best thing is selling only a portion of your future payments so you can continue to receive some regular monthly payments for yourself. Then, as time passes you can always sell more of your payments for more cash. Maybe it is better to sell lump sum payments due in the future, while keeping your monthly payments in place. Plans can be developed to accommodate your needs. Be very, very careful if someone is trying to buy all your payments now! Think about how much cash you really need now and how much money you will continue to need in regular monthly payments.
4. A Tailored Solution. Does your consultant take the time to fully understand what is needed in order to satisfy your needs? No two people have the same problems, concerns, and anxieties. As a result, no two people’s problems can be solved in exactly the same way. The person you work with should develop a personalized plan; something that addresses your problems and helps you achieve your goals. If a consultant only offers one solution, your choice is either “yes or no.” You don’t want a generic “one size fits all” plan. When you are presented with two or three positive options, you can then discuss the pros and cons of each plan. Once you have all of the facts it’s easy to make the right decision and select the plan that is right for you.
5. Empathy. The best way to understand another person’s needs is to imagine yourself in their shoes. It is hard to properly present a cash payout for your structured settlement without knowing from first-hand experience the problems you are facing now, and the problems you will face in the future. As a parent of a special needs child who has been receiving structured settlement payments for over twenty years I can fully understand and empathize with many claimants’ needs. The consultant you chose should possess that same type of empathy and concern.
6. Service. Do you feel that your consultant really wants to provide you with the help you need, or do you get the impression that he is just looking to make a commission? There is a lot of work involved in preparing your case and your consultant deserves to be paid. Just make sure you feel right about whom you are doing business with and that they have your best interest at heart. I can’t stress this point enough.
Is the consultant hidden behind a wall of secretaries, account executives and administrative assistants? Or, is he or she readily available to you by phone, fax, and e-mail? Your case may take months before it is closed and you get the cash. You will have questions about what’s going on, why is it taking so long, and so on. Remember, this procedure of selling your payments is new to you, but your consultant should be willing to hold your hand every step of the way. If your consultant seems bothered by your phone calls, get someone else as fast as possible.
7. Truth. The truth about getting cash for your future payments is that it will usually take about two to four months for you to get the money. Here’s why. The process involves many steps. Here’s a hypothetical example of a case:
April 1. – Mary Smith (age 19) called me and said she no longer wanted to receive monthly payments, but wanted cash instead. I asked her to tell me more. She explained that as a child she was involved in an auto accident that left her permanently disabled. She uses a wheelchair, but has fully recovered from all of her other injuries. She wants to go to college but doesn’t have money for tuition. I asked if she was working and she replied that she had a secretarial job but really wanted to become an attorney and specialize in helping accident victims. She was receiving $2,000 per month and the payments would continue until she was 40 years old. I agreed to help her and proceed with her case.
April 2. – I met with my staff and we designed three plans for her to consider:
     A. We would offer to purchase $1,000 of her monthly payments now and she would continue to receive $1,000 per month until she was 40 years old.
     B. We would offer to purchase $1,000 of her monthly payments now, and after college and law school we would purchase another $500 of her monthly payments leaving her to continue to receive $500 per month until age 40.
     C. We would purchase her entire $2,000 monthly payments now. She would only use what was needed for tuition for college and law school and she would contact a tax and investment professional and would put the remaining money into a low risk investment such as tax-free bonds. She could then use this money to start her law practice in seven years.
April 5. She talked with her parents and her tax advisor and decided to go with option C. She called me and let me know of her decision.
April 6. I had my staff prepare the necessary papers and sent her an application by mail for her to sign and return. I also asked her to send me:
• Completed copy of application;
• The Annuity Policy
• The Extended Release/Settlement Agreement
• A copy of her most recent Annuity Check or Check Stub
• A copy of front page of most recent tax return
• Copies of two forms of identification (one must be clear photo I.D.)
• A copy of Marriage License (if applicable)
• A copy of Divorce Decree(s)/and property settlement(s) (if applicable)
• A copy of the Court Judgment (if applicable)
• Any other important papers related to her Settlement Agreement
April 12. Once I received this information we sent communication and notices to the insurance company, Assignment Company and attorneys.
April 15. The attorney in her State petitioned the Court for a hearing date.
April 18.The attorney received communication from the court that the hearing date had been entered into the court’s calendar for June 10th.
June 10. Mary was excused from appearing in court and the attorney appeared before the judge and explained the circumstances. The judge agreed that it was in Mary’s best interests for her to receive the money in exchange for the future payments and approved the sale of the payments.
June 15. Mary received the money via wire transfer into her bank account.
This is a very simple example, but you can see that the court set the hearing date almost 2 months from the date the attorney applied for a date. There is no way any company or consultant can control or manipulate the court’s calendar. Anyone who says they can is lying, plain and simple. There are many other circumstances that can delay your receiving the money. Make sure that your consultant keeps you fully informed.
8. Personalized Attention. Does the consultant have a staff that is similarly qualified to cover for him or her when they are out of town? Or, are you relegated to an administrative assistant who only takes messages and tries to relay them to the consultant while he is on the road? Does the consultant have so many clients he or she can’t provide you with the personal care and attention you deserve? Or, does he or she limit their services to a few select clients at a time that can then receive the best he or she has to offer? You just don’t want to be another file on someone’s desk.
As Director of Consumer Education for Novation Capital I occasionally travel, but my clients have access to me at all times. My staff is very qualified and understands each case that I handle. We have regular meetings and discuss the cases that are pending. I insist on these meetings for two main reasons: 1) to make sure that we present the proper plan for my clients, and 2) so that if I am not available or traveling, my clients can get the answer they need immediately. The consultant you choose should have the same type of support system in place for you.
Warning! Please remember, if someone offers you an amount that seems too good to be true, they are most likely just telling you what you want to hear just to get you to sign on the bottom line. Then as time passes they tell you that the there are reasons they can’t offer the same amount. And they offer you a great deal less.
If you don’t agree to take less they will stall your case, and if that tactic doesn’t work they will misrepresent your case in court so that the judge won’t approve the sale of your future payments.
So you decide to go to another consultant and company. However, this time the insurance and assignment company tell the court that you tried this once and it didn’t work so why should they agree to go along with the sale now. And you don’t get your money. My advice: Run; don’t walk, to the nearest exit.
Closing Thoughts
There are many other tactics that are used by consultants, and believe me; they are not in your favor at all. My advice is:
• Obtain the services of a true professional that takes the time to understand you and your problems.
• Then keep this report in hand while you are interviewing a consultant, discussing your case, and asking about what you can expect from the consultant and the company.
• Talk to your tax professional and attorney and see what they think.
• But remember, when it comes down to the bottom line, it’s your decision to make, and that decision could affect the rest of your life.
Source: SellerAware.org

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