When shopping for a company to purchase from, it is important to be educated about the best structured settlement buyers.
There are checks and balances in the secondary market. However, it is important to do your research on all purchasing companies.
Protect yourself from potential frauds and predatory practices by having a clear understanding of your financial goals. You are less likely to fall for unscrupulous factoring firms if you know how much you need.
An ethical buying company will not force you to sell $25,000 worth structured settlement payments if you know that you have $10,000 to pay off your high-interest credit cards debt. A good buyer will instead work with you to find you the best deal possible at a low rate.
You shouldn’t feel pressured or rushed by a company to make a decision.
When assessing structured settlement buyers, there are many variables to take into account.
Trustworthy, high-quality firms should:
- Helpful customer service representatives are available and there are multiple ways to contact them
- Demonstrate financial stability without any history of bankruptcy
- Offer a compelling offer
- Follow the appropriate regulations and get licensed
- Give a timeline of when you will get the money
- Demonstrate complete knowledge of state laws
- Transparent disclosure of discounts rates and fees
- Before making any decision, it is a good idea to consult an accountant or lawyer.
- You can offer a set amount of cash upfront
Ask the Right Question
Interview potential factoring companies. You are responsible for your money. It is important to ask the right questions in order to ensure you receive a fair deal for you and your family.
These questions can help you determine the expertise and capabilities of a company:
- What is the standard discount rate you offer?
- Which agencies do you have to be certified or licensed?
- What happens to my free quote?
- What length of time have you been in the business?
- How much are the fees associated with my annuity settlement purchase?
- What is the time frame for selling?
- Your attorneys will handle the court approval process
A broker can also be helpful in this process. A broker, similar to a realtor, can help sell my structured settlement payments at the best price. They will also recommend buyers who have worked with them before and assist you in completing paperwork.
Ask about the brokerage fee and verify that they are licensed and certified before you hire an annuity broker.
Who will buy my structured settlements?
Factoring companies are known for purchasing annuity and structured settlement payments in return for fast cash at a discount price. You can find the best structured settlement annuity companies in San Diego, CA
The secondary market is a highly competitive and regulated industry that deals in structured settlements.
In the 1970s, structured settlements were created to provide a guaranteed income for plaintiffs in personal injuries and wrongful deaths cases. These payments are usually administered via an annuity, or another qualified funding asset.
Congress amended the Internal Revenue Code in 1982 to give tax-exempt status all structured settlement payments. This is provided that the settlement provides compensation for workers’ compensation, physical injury, or wrongful death. Structured settlements in other circumstances, such as lottery prizes or backpay, are taxable income.
These structures become rigid once finalized and the settlement holder cannot access his or her funds before schedule. This is a problem in financial emergencies such as the death or unanticipated medical bills.
In the 1990s, the lottery industry saw the first factoring company. They purchased future payments at a discounted rate from lottery winners and then sold them on to other companies. These businesses provide settlement recipients with a similar service today: flexible access to their money.
Before proceeding with the payment selling process, you should look at several factors.
Best Structured Settlement Buying Companies: How Does It Work?
A representative will contact you to collect your information. They will calculate a quote based upon how much cash you require and how many payments you wish to make.
When quoting you, purchasing companies consider several factors.
- Your structured settlement annuity’s value
- Once your payments have been disbursed
- How many payments you would like to sell
- Current market rates
- Rating of the insurance company that issued your Annuity
- Transfers may be subject to fees or additional costs by the insurance company
You will not receive all of the payments that you have sold. You will receive a discount rate on your payments, which is the amount you are willing to give up in order to get cash immediately.
This is because the purchasing company must cover legal and administrative costs. These companies exist to make money. Your settlement’s cash value will be lower if you have high discount rates.
The purchasing company will send you a contract detailing their offer if you accept their quotation. After the contract has been signed, the company will file the necessary court documents and schedule a hearing.
Before a structured settlement sale can be finalized, a judge must first review it. This federal law is outlined in the Structured Settlement Protection Acts. It serves to protect consumers and ensure that settlement holders are protected.
The purchasing company will help you with the court approval process. The purchasing company will most likely provide an attorney to represent and handle all legal documentation.
Experts advise sellers to seek independent advice from financial or legal advisors, as the factoring company’s lawyer will act in their best interests, not yours.
The court approval process can take anywhere from 45 to 60 business days.
After the sale is approved by a judge, a copy the transfer order is sent the insurance company that manages your structured settlement annuity.
The factoring company will then send you a lump sum payment. This is usually done within three to five days of the court’s approval.
How do Structured Settlement Purchasing Businesses Make Money?
Factoring companies typically charge anywhere from 9%-18% to cover operating costs and make a profit. However, lower rates are not uncommon and should be taken into consideration.
In most states, purchasing firms are required to disclose any difference between the future value of your payments and the amount they offer.
According to IRC section 589(a), structured settlement buying companies that fail to comply with federal and state structured settlement protection acts will be subject to a 40% excise duty. This section of the tax code is intended to discourage factoring companies charging excessive rates for higher profits.
Structured settlement buyers that are trustworthy make money by charging reasonable fees and rates for their services. Purchasers must consider the risks associated with multiple annuity contracts.
Uncertain economic forecasts, and the possibility that the annuitant will die prematurely in the case life-contingent annuities make this a high-risk transaction. However, this does not justify exploiting or abusing consumers with high fees and sharp discounts.
How do I know if the quote is fair?
Fair quotes should have a low discount rate. This will allow you to save more money. While discounts can be negotiated by factoring companies, most use a standard rate to calculate quotes.
The National Association of Settlement Buyers states that the average discount rate is between 9% to 18%.
You can shop around to ensure you get a fair price. Compare offers from at least two buyers.
You should tell each representative that you have received quotes from several companies. However, don’t divulge the dollar amounts of any competitors. A buyer may give you a better quote if they know that you are a smart shopper searching for the best deal.
It can be difficult to interpret your quote. Ask a financial advisor or a family member with financial experience if you have any questions. It is sometimes helpful to have another set of eyes when looking at these offers.
Feel free to contact us anytime at email@example.com or call us 619-363-3050