When several companies or investors compete to buy your annuity payment rights, you have a better chance to get the best price. If you simply approach one company, they will give you a take-it-or-leave-it price and you may not know if you are receiving the best offer. In this particular industry many companies use tactics such as low-balling in hopes that you will accept their minimal offer which in return will maximize their profit. Using an exchange such as Settlement Quotes, LLC will help eliminate these types of tactics and will help you get the best price for your future structured settlement payment rights.

The first thing you need to do is to find out the potential worth of your annuity. This will give the information needed to decide if it is worth selling and, if so, what would be considered a good price. Settlement Quotes provides calculators which can help you determine the value of your annuity. Once you have found the value of your future payments it’s time to decide whether there may be a better option instead of cashing in your annuity. Other options can include:

• bank loan
• borrowing money from friends or family members
• selling other assets
• checking with local Credit Unions

If you are asking yourself, should I sell my annuity, consider your other assets. If by selling your annuity you can save your house, avoid serious debt or pay medical or education bills it will be well worth it. With rates at historical lows, the cost of cashing in a structured settlement or annuity is much cheaper now than it ever has been and quite possibly ever will be. There may be better options so it’s always best to consult with an attorney or financial planner before making any final decisions.

If you would like to obtain a free quote to sell your structured settlement or annuity payments, please complete the form at the top right of the page or call Settlement Quotes at 888-665-1257. Also, if you would like to use our free present value calculator or our discount rate calculator, click here.

1) Research Companies

• Check the company’s Better Business Bureau record. Is the number of complaints reasonable? Make a decisions whether the company uses ethical business practices.
• Do a Google search on the company. Do you see any complaints? Bankruptcies?
• Get the opinion of outside sources and provide the sources with the information you have uncovered. Sometimes a different opinion can be a better opinion.

2) Get Several Quotes

• Don’t jump at the first offer you receive. Many times companies will lowball a quote to make more profit.
• Don’t disclose the quote amounts that you have received from the other companies or the names of the companies you have received quotes from. Find out if the company is going to try and take advantage of you or if they are going to provide a great quote from the start. You will know who is looking out for your best interest once you use this tactic.

3) Closing Date Guarantee

In order to secure more transactions and higher profits, companies will use tactics such as “interest drag” to delay the closing on your structured settlement factoring transaction.

• Get a guarantee that the closing will be within a reasonable time period. In most states, except New York (12 weeks), an 8 week guarantee is usually sufficient.
• In the guarantee, demand that any delays will award the per diem amount be paid to you upon closing. This way you will know the company is not profiting by delaying you case.

By using these three tips, you can be sure you will receive the most money for your structured settlement. If you have any questions, please feel free to call us at 888-665-1257 or comment below to add to this article.

Judge Ruiz makes the following statements in her denial:

• “Turning first to the “fair and reasonable” analysis of this transfer: utilizing the financial computations of Petitioner included in the annexed paperwork, the discounted present value of $60,677 with a net payout of $17,340.00 would result in a final discount rate of 7l.40%. Such a discount rate is more than double that whish banks are currently charging and more than even the steepest crcdit card rates of 29%.”

Comment:

It’s important to note that the discount rate of this transaction was not 71.40%, the discount rate of the transaction was 17.9% effective. Within the documents submitted to the court, Peachtree calculated the discount rate using the gross net amount of $19,540 prior to deducting $2,200 of legal fees charged to the annuitant. In this author’s opinion, this should be illegal. This tactic used by some companies is there to inflate the initial quote to the annuitant. Most companies in the industry do NOT charge legal fees. Legal fees are built into the initial quote provided to the annuitant.

Click here to use our structured settlement discount rate calculator or our present value calculator to find the discount rate or present value of a factoring transaction.

Statement by Judge Ruiz:

• “Apparently, there is a growing proliferation of late night and cable television commercials by factoring companies promoting these transfers, utilizing catchwords such as “It’s your money and you should have it now’, These commercials leave desperate viewers with the purposeful impression that they will actually rcceive up-front, dollar-for-dollar exchanges as soon as they apply. Such disingenuous marketing serves to promote the financial gain of these factoring companies while undermining the integrity and legitimate purpose of structured settlements. Payees such as Ms. Feliciano, discover after they’ve applied for these transfers, that the illusion of receivíng all of their money up-front, rather than later, is not the reality. Payees faced with difficult financial circumstances often relinquish the greater part of their structured payments because they believe they have no alternative.”

Comment

Judge Ruiz hammers home the fact that the advertising produced by some companies in the structured settlement factoring industry preys upon desperate annuitants who feel they have no other choice but to cash in their future structured settlement payments. From this author’s knowledge of Peachtree’s cost of money, Peachtree would have profited approximately $23,000 before any overhead costs or expenses were deducted.

By shopping her payments, this annuitant could have doubled her payout by simply making one or two more calls. Our offer to this individual would have been approximately $34,000.

Other Blog Posts Regarding This Topic:

• The Illusion Of Receiving All Of Their Money Up-Front, Rather Than Later, Is Not The Reality
• Peachtree Settlement Funding Gets the “Bronx Cheer” From Judge Norma Ruiz!

This article is inaccurate and misleading on a number of accounts.

Firstly, our Group has transacted over $350 million in these types of payments with zero defaults.

Secondly, the liquidity risk that is mentioned in the article is a risk common to many investment insurance annuities and is not unique to annuities purchased on the secondary market.  It is a risk that is fully disclosed in our Group’s Buyers Guide that is given to all prospective buyers.  Buyers accept this risk because the guaranteed nature of the investment with significantly superior fixed rates of return are worth it.  The investments are designed as long-term holds and should not be purchased for short term strategies.   For example, they qualify for IRA plans.

Finally, with respect to the Dallas court case referred in the article:

• No structured settlement annuity case is sold by our Group until a fulsome due diligence process is completed and results disclosed to the buyer.  This includes a benefits letter from the annuity issuer confirming the annuitant’s payments still for sale.  ( If a prior sale transaction had been concluded, same would be noted in this benefits letter.)  Court, lien, and bankruptcy searches are conducted in all cases as against the annuitant and the annuity to confirm if a prior transfer order or UCC filing statement evidencing a prior transfer or encumbrance exists.   It is important to note that even pre-2002 transfers had recorded UCC filing statements providing notice of these transactions.
• each transfer application is served upon the registered owner of the annuity and the annuity issuer and they are provided with a minimum of 21 days notice to respond or object to the transfer prior to the court hearing the matter.  If a prior transfer has occurred the annuity issuer does object and the transfer order is not granted.  In such case transaction is never completed.
• At transfer court hearings, often the court will refuse to issue a transfer order on account of a prior transaction having been disclosed.  This is a positive thing and is further evidence that the system is working so as to prevent a double sale of the same annuity payments.

In summary, provided proper due diligence is carried out there is not the risk referred to in the article.  This is why it is important for a buyer to carefully choose the company from which it buys these annuities.

Unfortunately the article fails to mention the benefits of this product:

• High yields, between 5 – 8%.
• Fixed returns on fixed dates paid by S&P A- to AAA rated insurance companies.
• Certainty through court order.

In conclusion, some things really are not too good to be true.

Below is the section of the North Carolina Structured Settlement Protection Act which has not allowed most North Carolina structured settlement recipients to sell their payments since enacted:

“The discount rate used in determining the net amount payable to the payee, as provided in subdivision (2) of this section, does not exceed an annual percentage rate of prime plus five percentage points calculated as if the net amount payable to the payee, as provided in sub-subdivision (2)f. of this section, was the principal of a consumer loan made by the transferee to the payee, and if the structured settlement payments to be transferred to the transferee were the payee’s payments of principal plus interest on such loan. For purposes of this subdivision, the prime rate shall be as reported by the Federal Reserve Statistical Release H.15 on the first Monday of the month in which the transfer agreement is signed by both the payee and the transferee, except when the transfer agreement is signed prior to the first Monday of that month then the prime rate shall be as reported by the Federal Reserve Statistical Release H.15 on the first Monday of the preceding month;”

This section states that no company may purchase a structured settlement in the State of North Carolina unless the discount rate used on the transaction does not exceed prime plus five percent. At this moment the prime rate is approximately 3.5% which means the discount rate used in determining the amount payable to the annuitant cannot exceed 8.5%. Settlement Quotes has recently acquired rates which will allow us to complete transactions at rates lower than 8.5% on a consistent basis. At this time there is no other company in the industry that can complete transactions in the State of North Carolina on a consistent basis.

Over the past few months Settlement Quotes has been able to complete a few transactions in this state, but we had to turn away many annuitants because we could not obtain a rate less than 8.5%. In order to obtain such a rate we needed the following:

• long payment stream
• high present value

Over the past several weeks we have been working hard to secure better rates. With our improved rates the majority of North Carolina structured settlement recipients will have the option to cash out their structured settlement.

In the past week, Settlement Quotes LLC has competed on three separate cases where Clearscape Funding has offered the annuitant discount rates between 10-14% as opposed to Settlement Quotes offering rates between 7.7- 10%.

For those individuals unfamiliar with discount rates, a discount rate is a rate used to price future structured settlement payments. The lower the rate, the more money the annuitant receives in their lump sum payment. The company purchasing your structured settlement payment rights should always provide this number so you know if you are receiving a fair deal. Depending upon the payment structure of your annuity, you should receive a rate between 8- 15%. There are circumstances which can cause the discount rate to be higher but still providing the annuitant with a good deal.  Discount rates are calculated from the amount and time of each payment. Payments that are further out in time or have a larger present value will always have a lower discount rate, the opposite applies for payments which are closer in time or have a smaller present value, the discount rate will appear higher for these payments.

It’s always important to remember that payments closer to the present date will always be worth more than payments further out in time. Feel free to use our structured settlement discount rate calculator to calculate the value of your future payments.

This author can understand why a company like Symetra would offer a service like Clearscape Funding to provide an alternative for their clients to cash out their future payments as opposed to using companies like  JG Wentworth or Peachtree Financial. Clearscape Funding should be able to provide the best rates in the industry especially on it’s own paper. For some reason this isn’t happening and Symetra policy holders are suffering. Either Clearscape doesn’t think its own paper is worth the going industry average or they are trying to take advantage of these structured settlement recipients.

If you are in a situation where you need to cash out your structured settlement in order to provide liquidity, always shop your payments to multiple companies in order to get the best price.

From this author’s experience, with proper planning, there should be very few instances where annuitants have to cash out their future structured settlement payments multiple times. Our goal as a factoring company should be to solve the annuitant’s liquidity problems the first time without having to do multiple transactions. The cost of doing multiple transactions is extremely expensive due to court costs that are involved with each transaction.

Every annuitant’s situation is unique and needs careful planning in order to execute a beneficial transaction.

• The annuitant’s immediate liquidity problems should be solved
• If the annuitant depends on their periodic payments, these payments should stay intact
• Future financial obligations should be addressed to ensure monies are available for these needs

There are instances where annuitants have to complete a second factoring transaction in order to fulfill their financial needs. In this author’s opinion many annuitants still shop their payments in order to obtain the best price. For Settlement Quotes, this scenario does not change the way we do business. We provide the best price, upfront, every time, regardless of the number of transactions the client has completed with us in the past.

It can be confusing, complex topic, and many companies are not communicating accurate information. It’s actually a simple concept, but the legal documents make it seem much more complicated than it is.

What is a structured settlement?
A structured settlement, strictly defined, is a negotiated agreement in a tort action to provide payments over time. It happens after a court process where one party was hurt and the other party is told to pay. The matter could be personal injury, worker’s compensation for an on-the-job injury, property loss, wrongful termination or a wrongful death claim where a spouse and/or minor children are seeking compensation for lost wages and intangible support, or similar issues. Structured settlements are not usually considered for minor or short-term injuries.
It should be noted that lottery payments are not structured settlements. Those are agreements for periodic payments over time. There are fewer regulations on how to cash-out those payments – turning that revenue stream into a single payment.

Reaching an agreement on a settlement offer can significantly reduce legal fees for both sides of the complaint. Moreover, the injured, or aggrieved party, can get more money over their lifetime than they would in one big check. This can be especially important if an injured person needs long-term medical care, or if minor children will need support over time and through college.

Due to a tax code change in 1982, structured settlement payments are exempt from federal and state income taxes. A structured settlement guarantees funds at defined intervals, such as monthly, for a specified period of time. Depending on the situation, it could be 20 years, or several decades, and in some cases the parties can receive funds beyond the guaranteed settlement term.

Structured Settlement Benefits
Industry data varies, but we’ve all heard stories about people who “hit the jackpot” with a single big payment, only to end up losing it due to mismanagement. The industry calls it “dissipating” those funds. That is cited as the key benefit to staying with a structured settlement payment arrangement.

Registered Settlement Planner John Darer, president of 4structures.com in Stamford, Conn., said that a primary benefit is that structured settlements represent a “stable, guaranteed” cash flow.

“These funds are free of market volatility, which as we’ve recently seen can be quite brutal,” he said. “Injury victims with no incomes or reduced incomes, cannot absorb those losses. Structured settlements also have built in spend-thrift protection.”

Darer calls himself a “centrist” in that he does not predominantly cater to either the plaintiff (injured party) or defendant (insurance company) in structured settlement planning.

The Process
Developing a structured settlement arrangement will involve attorneys and possibly a settlement planner or financial advisor. The injured party is either filing a claim or suing a defendant, either of which may be covered by an insurance company. There will either be a battle in court, or one of the parties may compromise and settle.

If the decision is to negotiate, then it is best to have a specialist to estimate long-term costs. If someone needs long-term medical care or minor children need funding over the long-term, a professional needs to perform interest rate calculations and estimates of whether medical or other expenses may spike at particular times. An attorney can ensure the language protects his or her client.

Angel Viera, a professional with with L.A.-based Structured Financial Settlements, said that people need to understand that, even if offered a lump sum settlement, they have the option to invest in a tax-free annuity from a highly rated insurance company.

“However, keep in mind that the structured settlement has to be worked into the settlement, Viera said “A tax-free structured settlement annuity cannot be funded once the claimant has received the settlement proceeds.”

Issues and Benefits of Cashing-Out
Because of the guaranteed nature of structured settlements, there are those who are adamantly against factoring, or cashing-out, all or part of a settlement. But then there are life’s realities. Sometimes the claimant does need the “cash now.” But it comes at a price, and that is something to examine and consider.

The question is, at what cost? “There is no question that people will typically lose somewhere between 15 percent and 25 percent of the present value of their remaining payments,” according to Mark Wahlstrom, of Scottsdale, Ariz.-based Wahlstrom and Associates,”I am not against factoring, and I will refer people to firms I think are honest and transparent, but that is the reality.”

Wahlstrom is a structured settlement financial advisor who works almost exclusively with the plaintiff, or injured person’s side. Other advisers work almost exclusively on the side of the insurance company that is financially backing the accused party, or defendant,.

Most of those consulted on this story agree that understanding the “present value of future money” is one of the more misunderstood concepts by consumers. A dollar today is not going to be worth as much as a dollar five years from now.

“I think one of the biggest mistakes people make when cashing out a structured settlement is not adequately shopping their options ,” said Andrew Cravenho, principal of Bloomfield, Conn.-Settlement Quotes LLC. “There is industry data that discounts rates used to calculate present value, generally varying from 8 to 18 percent. These rates are essentially the cost of money. Folks often go to one company and that is it. They don’t look around.”

Settlement Quotes LLC specializes in bringing willing sellers to the most generous settlement buyers. Cravenho said that some of the companies that spend the most on advertising offer the most disadvantageous deals to their clients.

“Our firm searches the full range of structured settlement factoring companies as well as private investors,” he said. “We consistently deliver arrangements for our clients from firms that offer discount rates in the 7.5 – 9 percent range. Shopping around can pay huge dividends.”

The difference between 7.5 percent and 18 percent on an average settlement is $125,000 compared to $85,000-a whopping $40,000 difference.

“The policy of some firms is to charge 18 percent on every transaction,” he concluded.

Another way to lose more money in a factoring deal is sometimes referred to as “interest drag.”.This means the present value of future payments is fixed when the seller agrees with the terms and signs the paperwork. After the paperwork is signed, firms can vary significantly in how quickly they execute the deal. The longer it takes for money to be transferred from the buyer to the seller, the more profit the buyer makes, and the more money the settlement seller loses.

To address this, Cravenho said that Settlement Quotes agrees to pay a per diem fee to the seller between the day the terms of the cash-out are contractually set and the day the funds are disbursed. That prevents any interest drag loss to the seller and eliminates any financial incentive to delay the final payment.

Darer, the settlement planner, also recommends that sellers take control by using a structured settlement factoring discount rate calculator found at www.structuredsettlement-quotes.com or the Structured Settlements 4Real blog at www.structuredsettlements.typepad.com . The calculator helps consumers easily discover for themselves what the real, or effective, discount rate is on their planned transaction. They do not have to rely on the buyer.

Factoring deals must also be approved by state courts, using the general standard of whether the factoring arrangement is in the best interest of the person receiving the settlement payments, or any dependent party supported by the payments. Darer points out that 46 states have laws in place regulating this process. Forty-one states are closely modeled on a model law enacted by the NCOIL (National Council of Insurance Legislators). A few states that enacted legislation before NCOIL’s model law was drafted closely resemble it, Darer said. In general, these laws call for the disclosure of the transaction details to the seller, notice to other interested parties, a strong warning to seek professional advice and finally court approval based upon the “best interest” standard referenced above.

For example, North Carolina recently passed restrictions that make it impossible to cash-out a structured settlement. The majority of states, however, are fairly uniform in the way they look at factoring of structured settlements, Cravenho said.

There are reported cases of attorneys taking factoring deals to court with what are more frivolous reasons for cashing out structured settlements, like buying a sports car or other luxury items. Courts will reject such requests. The annuitant is still liable for attorney fees, but is not getting a factored advance on their settlement payments.

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Resources
John Darer, registered settlement planner and president of Stamford, Conn.-based 4structures.com LLC, www.4structures.com.
Angel Viera of Los Angeles-based Structured Financial Settlements, www.structured-settlements.com.
Mark Wahlstrom, a structured settlement financial advisor with Wahlstrom and Associates based in Scottsdale, Ariz. www.wahlstromandassociates.squarespace.com
Andrew Cravenho, principal of Bloomfield, Conn.-based Settlement Quotes LLC. www.structuredsettlement-quotes.com
Settlement Factoring Discount Rate Calculator, www.structuredsettlement-quotes.com or www.structuredsettlements.typepad.com
Washington, D.C.-based National Structured Settlements Trade Association, www.nssta.com

“I have included my response to the BBB (Better Business Bureau) and I would like to share with consumers.

I am in reciept(sic.) of the response from Stone Street capital regarding my BBB complaint and would like to respond. I find it highly unlikely that Stone Street would be confused about my feelings or complaints against them as I have been very vocal throughout the transaction. First let me point out that I am exceptionally familiar with the process of this type of transaction as I have sold payments twice before.

I entered into an agreement with Stone Street in November of 2009 with the understanding that the case would be filed right away and that I would be funded by February of 2010 which is why the sale began with my March 2010 payments. I was very much surprised and dissappointed(sic.) when I learned that the case was filed in King County Court until February 1, 2010 which gave us a hearing date of March 16, 2010.  As far as the modified deal. Stone Street failed to file the amended documents with the court as required. The sale price that was on record with the court was close to ten thousand dollars less than the ammended(sic.) agreement. As far as purchase price, I feel that I was a victim of bait and switch. I was initially offered a net price of $62,000. The ammended(sic.) documents left me responsible for the $1900 attorney/processing fees.

I feel that everything that I was warned about happened to me in this transaction. I was promised 2 gift cards for agreeing to the transaction and recieved(sic.) one. When asked about it, I was given the cold shoulder. When I was offered a higher price by Genex Capital I tried to Cancel with Stone Street and recieved(sic.) an intimidating almost threatning(sic.) call indicating that I had already entered into the contract with them and it was basically too little too late. I threatened to tell the judge about the other offer and that I didnt(sic.) feel like accepting $10,000 less was in my best interest. Prior to entering into the contract I was NOT provided an explanation of the process and the time frame as councel(sic.) for Stone Street would lead you to believe. Instead I was assured that I would be funded by February 2010. I was warned about “interest dragging” . I feel that I fell victim to this which is why the transaction took literally 5 months or more from beginning to end. To add to my belief that I was a victim of the “interest dragging”, 1 week after the judge approved the order I was advised by my insurance company that they were not in reciept(sic.) of the court order which was necessary to complete the process. I took it upon my self to fax the legal department a copy of the approved order. I contacted the insurance company the following day to confirm reciept(sic.) of the fax. I was advised at that time that they had recieved(sic.) my fax and at that time Stone Street had still not forwarded the court order.

My list of complaints with Stone Street go on and on. It was at the advice of my attorney that I filed a complaint with the BBB.  While I have been funded I am in no way satisfied with my experience with Stone Street. I have kept a detailed record of my communication with this company. As far as the courtesy advance that I was given, it was the very least that they could have done. So no, I am far from satisfied with this transaction. Aside from finally being funded I am not satisfied with the response or experience with Stone Street Capital.”

Tips to Avoid Such an Experience

Here are a few tips to avoid an experience like this annuitant faced.

Problem: $1,900 of legal fees were charged to the annuitant in order to complete the transaction.

Solution: A structured settlement factoring company should not charge legal fees for your case. Make sure that the price the company is quoting you is the price you will receive at closing. Sometimes a company will hide this language within the contract and will deduct the cost at the end of the transaction.

Problem: The transaction carried on for a period of 5 months. This is a perfect example of “interest drag”.

Solution: Do not work with a company that does not offer you a time period guarantee. If this client had worked with Settlement Quotes, we would have provided a guarantee stipulating that they would receive the per diem interest accumulated from any delay in the process or transaction.

Problem: The annuitant was offered $10,000 more by Genex Capital unknowing that the cooling off period had expired.

Solution: The solution to this problem is a little more difficult than the others. If the cooling off period (period in which the annuitant has the right to cancel, usually within 3 to 10 days) has expired there isn’t much one can do, but it’s important to do your due diligence prior to signing a contract with a company. Make sure you receive several quotes in order to make sure you are receiving a fair market value for your annuity payments.

Using a company like Settlement Quotes would eliminate such a problem because we send your payment stream out to many investors and factoring companies to compete in order to get you the best price for your future structured settlement payments.

By reading this article, one would think that the structured settlement factoring industry is out to steal money out of annuitant’s pockets and this is for good reason. From an outside perspective this author can see how this could happen, but please be assured that there are companies such as Settlement Quotes were annuitants can go to get a great price for their structured settlement payments. The only press that this industry seems to generate is press involving companies like Peachtree Settlement Funding ripping clients off.

In the article, “Need Cash Quickly? You’ll settle for less“, Heather seems to be happy with the transaction that she had with Peachtree even though the discount rate of the transaction is above 18%. Heather was able to get enough money to get her back up on her feet, but the sad truth to this is that Heather could have sold only a small portion of her $150,000 payment to raise the same $11,000 if she had contacted a company like Settlement Quotes.

The industry as a whole has seen discount rates decline as private money has poured into the secondary market over the past 6 months. Structured settlement factoring transactions are being completed with discount rates below 8% which is at a historical low. This trend is rapidly diminishing due to the Fed threatening to raise rates. While the discount rate for Peachtree’s transaction is extremely high for the time, in the near distant future the average discount rate may reach into the mid teens.

If you are looking to cash out a structured settlement, this author suggests to get as many quotes as possible to ensure that you are getting a fair market value for your future structured settlement payment rights.