At Structured Settlement Quotes, we believe that it is essential for individuals seeking to sell annuity payments to understand this concept so they can have a fair appreciation of how much their structured settlement payments are worth. Time and time again we witness how factoring companies abuse the present value formula to provide clients with ridiculously low quotes.

It’s a fact of life that things get more expensive, for example, in 1962 a burger went for 20 cents, now 99 cents, wranglers double mint chewing gum cost 5 cents then now were up to 50, Penn university of Pennsylvania cost 1250 in 1960, now were up to over 42,000, average cost of a car went up from 2,600 in 1960 to 32,000 last year, and so on and so forth.

Remember, the idea of present value is that money today is worth less than money tomorrow. Usually, it is easier to start by looking at the inverse of that. That is, with the assumption of 10% rate of return, $100 today worth exactly $110 in the future. The reverse is exactly the same. Let me explain by breaking down this concept to its three main components:

By definition (using investopedia), present value is ‘the current worth of a future sum of money or stream of cash flows given a specified rate of return’ . It is calculated by discounting the future sum of money by the specified rate of return, taking into account the time value of money;

(1) Future sum of money is simply future payment(s). In your case it is most likely one, or more future payments paid by the insurance company. For illustration purposes, assume you receive one future payment one year from now, let’s call it ‘F1=$110’.

(2) Specified rate of return (also known as the discount rate) is the appropriate rate at which we discount the future cash flow. The key is to determine this rate. As a general rule of thumb, this rate is determined by looking at similar comparable investment products and their associated rates, as determined by investors. Let’s call it ‘r=10%’.

(3) Time means month(s) or year(s), depending on when in the future the payments are received. Let’s call it ‘t =1(year)’.

Now, to calculate the present value all we need to do it to discount the future payment while also taking into account the time of the payment. The formula is PV= (F1)/(1+r)t, or in our example PV= (110)/(1+10%)1 in this case PV equals $100. A more complex case would include more payments in different times, but the concept remains the same: present value is the current worth of future payments.

We believe that it is important for you to try and understand this (at least on the conceptual level) before you sell your structured settlement annuity payments.

Now that you understand this concept, we invite you to do the same thing we did after we learned how to multiply, we invite you to use a calculator!

Please visit our Structured Settlement Calculators
Where you will find:

Present Value Calculator

Effective Rate and Nominal Annual Rate Calculator

and Structured Settlement Discount Rate Calculator

None of these companies are Structured Settlement Quotes Certified Funders and therefore none of these companies are permitted to bid on our client’s structured settlement payments.

Company: National Underpayment Assessment Program (“NUAP”)

Letter Text (image at the bottom of the article):

UNDERPAYMENT ASSESSMENT
PERFORMED IN RELATION TO 26 USC 5891

130**AUTO**MIXED

Dear XXXXX;

The National Underpayment Assessment Program (“NUAP”) assists individuals
in evaluating whether they received the appropriate payout for their structured
settlement payments in a recent transaction. This assessment involves analysis of
the critical terms of prior transactions in order to make the determination. Based
on prior reviews, we believe individuals often could have received additional
funds in exchange for their structured settlement payments.

The services of NUAP are completely free to the consumer. Utilization of
the services can result in individuals receiving, in some cases, thousands of
dollars more in the future.

If you are interested in hearing more about our underpayment assessment
services or discussing what might be the fair market value of any remaining
payments, please call NUAP at 1-800-317-3769

THIS PROGRAM IS LIMITED AND WILL ONLY BE
AVAILABLE FOR A SHORT TIME.

TO TAKE ADVANTAGE OF THIS PROGRAM YOU MUST RESPOND WITHIN (5) BUSINESS DAYS OF THE RECEIPT OF THIS LETTER PLEASE REFER TO REFERENCE CODE: AM5891SS
1-800-317-3769

The practices of NUAP are exposed as being inappropriate as follows:

1. Searches historical court records to obtain name and contact information of an annuitant who previously transferred structured settlement annuity payments through the mandatory court ordered transfer process and uses this information to mail and/or telephone such annuitant to solicit their services whether or not that annuitant sought out such services from that company. (See attached example of one such letter to an annuitant who happens to be a Structured Settlement-quotes.com client.)

2. The National Underpayment Assessment Program (“NUAP”) value proposition in their letter below, in our view, portrays the NUAP possibly as a neutral, objective national association or consumer watchdog. In fact, the telephone number referred in the letter 800-317-3769 is registered to Catalina Structured Funding LLC, (see bellow a snapshot of their webpage).

Catalina is a funding company and a for-profit corporation that earns its income buying structured settlement annuities. As such, in our view their value proposition is misleading. Make no mistake, Catalina Structured Settlement Funding LLC is not performing this service out of the goodness of their heart, but rather are doing so, in our view, most likely to try to enter into a further transfer transaction with the annuitant.

A Scan of original letter:

1. When an annuitant contracts with a Structured Settlement Funding Company (such as J.G. Wentworth, Genex Capital, Peachtree Settlement, Solid Funding, Sovereign Funding, Woodbridge, Novation Capital) their name and contact information generally appears in the court application filing.

2. Court applications become accessible to the public once filed with the court. As such it is possible to visit a court office and obtain information about a structured settlement annuitant in respect of structured settlement transfer applications filed at that court.

3. Since the beginning of this year we have noticed a huge upsurge in the amount of unsolicited junk mail and phone calls that are being made to our clients shortly after their court applications are filed in their respective court.

4. We are told that the upsurge is due to competitor funding companies such Seneca One, Imperial, Catalina Funding, and many others going to court files and pulling the personal information of annuitants through what has been referred to in the industry as “Court Scraping”.

5. In an effort to see how widespread the problem is SSQ called up the Seminole County Court office in Florida on April 26th, 2012 and asked the records clerk if it is commonplace for a structured settlement company to request a copy of the documents of another structured settlement factoring company and the clerk actually chuckled and said that they have a staff member who works 40 hours a week solely copying the structured settlements sales transfer applications from one company and sending them to multiple other competing structured settlement companies who have ongoing requests for the records office to send them all competitors documents. The clerk said that the person doing this work at the clerk’s office can no longer keep up with the demand and is falling way behind and they have had to move staff from other areas to help keep up with the demand for these documents. The clerk said that it is becoming a very big problem for their office and that the records department is beginning to feel like there only job is to copy structured settlement transfer applications so that structured settlement companies can steal deals from one another.

6. Virtually every piece of direct mail from these competitor companies suggest that they will beat a current price so as to entice an annuitant to either break their current potentially legally binding agreement already in court process or to try to get the annuitant to sell additional payments that remain unsold and remaining payable to them.

7. What we find even more disturbing than all of this unsolicited junk mail and unwanted telephone calls, is that some companies appear to be sending fake checks purporting to offer $150.00 up to $8,000.00 to these unsuspecting annuitants if they proceed to do a deal with such company. Initial telephone calls to Bank of America, where some of these checks purport to be drawn, suggest that these checks are not real and the account numbers are false. The checks are sent by mail through the US Postal Service.

Structured Settlement Quotes is so concerned about this situation that it has launched its own investigation into customer complaints.

Over the coming weeks we shall be bringing to our readers’ attention specific details of our investigation including copies of checks and other mail items as well as details on possible reporting to the various authorities. Please stay tuned.

Structured Settlement-Quotes.com has been in business for five years, is A rated by the Better Business Bureau, and provides its services nationwide throughout the US.

How it works is a person who is wishing to sell annuity payments will input their contact information and annuity payment details (payment amounts, payment dates, and payor insurance company) into www.structuredsettlement-quotes.com. Certified Funding Partners, prescreened by Structured Settlement-Quotes.com on the basis of strict criteria, then bid on the payment stream, offering a present value purchase price for the future payments. A customer service expert then contacts the seller either by telephone or email to give him/her the best offers and explain the transfer process. If the seller agrees to proceed then the seller is referred to the successful Certified Funding Partner to complete the transfer process and funding. Structured Settlement-Quotes.com earns a transaction fee upon the successful completion.

Mr. Jones explains that oftentimes individuals will see a tv advertisement by companies such as J.G. Wentworth and agree to do business with them without ever exploring alternatives. “It’s a real tragedy to watch these people settle for literally thousands of dollars less by not doing their homework and seeking out companies like ours. I have seen people as much as double their money by shopping through Structured Settlement-Quotes.com”

In the coming months Structured Settlement-Quotes.com will be making considerable investments into its online user experience and marketing initiatives so as to get the word out in an effort to assist all those wishing to get cash now for their future payments

On July 12, 2011, J.G. Wentworth and Peachtree Financial Solutions simultaneously issued a press release announcing that they had completed a transaction allowing them to operate under a single company, JGWPT.
The merger has made a significant impact within the structured settlement and annuity factoring industry.

“This is a great opportunity for both companies and their respective customers,” David Miller, CEO of J.G. Wentworth stated. “It brings together two strong specialty finance companies who will continue to operate independently.”

In sharp contrast, 155 of Peachtree employees that worked out of its Boynton Beach, FL office (that’s 90% of their workforce there) were laid off. The remaining 10% were relocated to J.G. Wentworth’s current headquarters in Radnor, PA. Peachtree’s former CEO Jim Terlizzi has been relegated to a seat on the board of directors. These moves indicate, in our view, that in spite of JGWPT’s attempts to represent this union as a true merger of equals, the reality is this is a takeover by J.G. Wentworth of Peachtree.

On a strategic level, these decisions were motivated, we believe, by at least two reasons—to protect itself and to eliminate a fierce competitor. Firstly, J.G. Wentworth had filed for bankruptcy only two years prior to the merger. Following the 2008 credit crunch, it was unable to cash in its securitizations, and on May 19, 2009, the major buyer of structured settlements and annuities filed three Chapter 11 petitions to a bankruptcy court in Delaware. The company acted quickly, but a fair assessment would suggest that it was in crisis mode. According to the Dow Jones Daily Bankruptcy Review, as of June 2nd, 2009, “[t]he Bryn Mawr, PA. company owed senior lenders nearly $371 million.”
During the Chapter 11 restructuring, it was believed by financial advisors that J.G. Wentworth “[was] worth $100 to $150 million as a going concern. If forced to liquidate, however, J.G. Wentworth would be worth less than $7 million.”

In our view, the decision to merge with Peachtree was not only made to save itself. But by merging with Peachtree, J.G. Wentworth has essentially swallowed up one of its main competitors and regained much of its market share lost during its bankruptcy work out. Moreover, the merger, in our view, significantly reduces the competition and therefore the choices that annuitants have to get the most competitive price for their annuity assets. This is in stark contrast to the message that we think JGW’s CEO would like people to believe.

Today, it is believed that JGWPT controls about 65% of the structured settlement secondary industry. Being the largest and most recognized group in the industry, they have taken the liberty of repeatedly giving what we consider shockingly low offers to annuitants who believe they have no alternative options, and accept these low-ball prices without shopping. A small number of more knowledgeable annuitants do seek price quotes from other factoring companies and, indeed, can do much better. In those cases we believe it is JGWPT’s policy to price match or offer a minimally higher price but only if forced to do so.

At Structured Settlement-Quotes, we think JGWPT’s policy is wrong and unfair to annuitants. Structured Settlement-Quotes believes annuitants should shop around to get the best price from various companies rather than just settling on the first offer they receive. We do that shopping for them so as to get annuitants more money for their structured settlement assets.

At Structured Settlement-Quotes only its highest guaranteed offers are provided without hassle or haggling.

Give us a try and see for yourself.

1. “J.G. Wentworth and Peachtree Financial Solutions Seal Deal – Will continue to operate independently under new holding company”, jgwentworth.com Press Releases, 7/12/11 (Last accessed 4/11/12). http://www.jgwentworth.com/about/news/press/detail.aspx?i=68

15. http://peachtreefinancial.com/company/press-releases/457

Structured Settlement Quotes Inc. expands its network of structured settlement purchasers as it welcomes its newest Certified Funding Partner, who is expected to enter its bidding marketplace on April 5th 2012.

The introduction of their latest funding partner, a US-based mid-sized institution with an outstanding reputation in the financial services and investment industry, is the result of a year-long search and assessment of no less than half a dozen financial institutions.

A key spokesperson for SSQ Structured Settlement Quotes Inc. stated, “After much careful consideration, we have ascertained that our new partner exceeds the stringent criteria we have outlined. This includes having direct access to ample funding reserves and a solid history of excellent business practices.”

One of only two open-bidding marketplaces serving the structured settlement and annuity transfer industry, SSQ Structured Settlement Quotes Inc. operates a unique marketplace model that aims to reduce the often striking discrepancy between discount rates offered by various structured settlement purchasers across the country.

Traditionally, structured settlement factoring companies have had little motivation to offer the best price quote to structured settlement payment holders. However, the recent economic crisis has spurred a demand amongst holders of payments to explore their financial options, which includes selling part or all of their settlements. This has led to increased competition between factoring companies, who are often simple brokerage firms that do not actually have the funds to pay out annuitants.

The uniqueness of the marketplace bidding system ensures that this kind of financial malfeasance and deception is avoided by creating a network of Certified Funders, all of whom must adhere consistently to an extensive list of minimum conditions. When an annuitant applies to cash in his or her payments via SSQ Structured Settlement Quotes’ platform, financial institutions that are part of their funding network submit competitive bids for each case. Evidently, the highest bidder is the successful bidder and ultimately gets chosen by the annuitant.

With this latest addition, SSQ Structured Settlement Quotes Inc. has taken a closer step to realizing its goal of providing the best alternative funding options to annuity holders seeking to receive cash for their structured settlements.

About SSQ Structured Settlement Quotes Inc.:

SSQ Structured Settlement Quotes Inc. is one of only two leading open-bidding marketplaces serving the structured settlement and annuity transfer industry. In operation since 2006, it has partnered with a selection of high-quality Certified Funders who bid on structured settlements and annuities, thus providing the best pricing to structured settlement and annuity holders seeking to cash in their settlements.

Structured settlement payments have received increased popularity in the United States since the 1970s and more than $100 billion has been paid to fund them. The payments are usually received on a periodic basis. However, the installment-like payments do not suit every person. Fortunately, it is possible to get a lump sum payment in exchange for structured settlement payments.

Why People Choose to Sell Structured Payments

Some claimants who win payments for damages may receive a structured settlement. Due to a variety of circumstances, however, it may not be convenient to wait for either months or years before receiving the full payout. Although structured payments are meant to help claimants receive a steady flow of income in the future, the rigid schedule that may take many years may make it difficult to meet present needs. Some annuitants decide to get money for their structured settlement payments.

However, the claimants may have some immediate needs that make the periodic payments unsuitable, including:

• Paying old debts

• Buying a new house

• Pursuing a business opportunity

• Covering unexpected school or medical charges

• Freeing up more cash flow

• Accelerating long-term payoff schedules

The Drawbacks of Structured Settlements

The structured settlements provide security for the future but cannot be adjusted to meet the present needs of some structured settlement recipients. Structured settlements are most often sold to pay off mounting debt.

How to Overcome the Challenges

It is possible to turn part or all future payments into 1 lump sum payment, which helps in addressing the present opportunities and challenges. Instead of waiting for years to receive payment, the transaction process usually takes between six and 12 weeks only.

Factoring companies buy structured settlements at a discount from the claimants; enabling them to get the cash they need in a lump sum instead of waiting to receive periodic payments for years. The companies buy structured settlement payment rights by giving a lump sum amount.

Structured settlement transfers have different terms that take into account a variety of issues, including the amount of lump sum payment the seller requires and the number of payments necessary to fulfill the obligation to the factoring company or investor.

Regulatory Considerations

Controversy used to surround the development of this secondary market, so much so that many states have enacted laws requiring the transfer of payments to receive court approval since 1997. The Internal Revenue Code reinforced the states statutes in 2002 by imposing a 40% federal excise tax on any transfer that does not get the required prior approval.

In spite of the differences in various states, the laws have some common denominators:

• The factoring company (transferee) must make some disclosures highlighting the values of transferred payments, which helps in making a contrast between that value and the value the payee is expected to receive in exchange of the structured settlement.

• The transfer of structured settlement payment rights must receive advance court approval.

• Some of the necessary procedures for seeking approval of the proposed transfers must be spelled out.

• All relevant key terms must be defined.

There are also several statutory provisions that provide supplemental protection to the payees. State courts are generally required to review transfer applications and make appropriate ruling.

Selling Structured Settlement Rights

Before selling a structured settlement right, it is important to determine whether you are eligible to do so. Some of the indicators for eligibility are when future payments are received:

• Following a personal injury, lawsuit or some other claim

• Are not because of worker’s compensation claim

• From an insurance company

• Only during the recipients’ lifetime or in the event of their deaths

• Are tax free

The first step to selling structured settlement right is finding a suitable buyer. The sellers have a lot of power and must ensure they get the best deal possible. It is always advisable to deal with a reputable factoring company that encourages its clients to consult attorneys before they sign anything. Such a company also has relevant experience in helping clients in need of more cash than their regular payments allow.

A good third party will customize contracts to suit individual requirements and offer the sellers a variety of options.

Explanation of Loan

Structured settlement loans are a type of financial arrangement in which an individual can exchange the rights to future payments for a structured settlement “loan” or lump sum of cash. The money from the structured settlement paid to the lender or funding company as if you were making monthly payments to payoff the loan. This is an option that allows an individual who needs to pay medical bills or to make an unexpected payment easy access to the money that they need.

Consideration Factors

The prospect of receiving a lump sum of money instead of periodic payments over time may appear as a preferable option, but there are factors to consider. When cashing out a structured settlement, the annuitant does not receive the full amount of the structured settlement. In most cases, depending upon the payout structure and amount of the structured settlement payments, the annuitant can receive massive discounts on the future value of the payments.

Factoring Process

A structured settlement factoring loan is approved by a state court as mandated by federal law. After approval and written order by the overseeing judge, the structured settlement funding company has up to 21 days to pay the annuitant. Most structured settlement loans take anywhere from 4-12 weeks to complete depending upon the state and funding company involved in the case. Most delays are caused by missing and outstanding documents.

Tips

• An individual’s credit score and credit history are not used to qualify for a structured settlement loan. This means your current financial situation is not typically a consideration when entering into a settlement factoring arrangement.
• Research the terms that are associated with your lump sum settlement before entering into any type of financial arrangement for your structured settlement.
• Shop around to multiple companies before accepting a lump payment offer.
• State laws exist to ensure that the loan amount that you receive for a structured settlement is fair.

The Logistics

Under a structured settlement annuity, the individual receiving the settlement has been awarded a cash settlement amount that is to be paid in installments over a set period of time at set intervals. For example, he or she may receive $1000 every month for a period of five years, for a total of $60,000. Cashing out structured settlement payments takes this future value and discounts it into a present value amount. The amount will be less than the future value, and the discount rate that the company will use will be based on the perceived risk of the future payments and the amount of profit that the company needs to earn. Following on the original example, the company may determine that the current payout it is worth $40,000. The difference between the payout amount and the future value, $20000 in this case, is the return earned by the company or the investor that is purchasing the payment rights. This practice is often referred to as factoring because it is the discount rate or factor that determines the profitability of the transaction to the company or investor.

The Advantages

There are several advantages for each party to the transaction, both the individual and the company. The individual benefits because he or she no longer has to wait for the payout period. Any risk associated with the future payments, the solvency of the annuity company for example, is transferred to the investor. The money may still be invested and a return earned on the money. This is an important consideration because the real cost of the transaction is the discount rate minus the risk-free rate – the amount the individual can earn with no risk, such as in U.S. treasuries. If the individual needs the cash immediately or believes that he or she can earn a more favorable rate in other investments, the transaction benefits the individual.

From the perspective of the company, the discount rate charged on this type of transaction is usually sufficiently high to lock in a very favorable rate of return for the company, even on a risk-adjusted basis. The company or investor can earn outsized annual returns because it capitalizes on two advantages. First, it has the resources to thoroughly understand the risks associated with the future payments. Secondly, the company diversifies its risks sufficiently so that should any given investment fail, it can still be successful overall. The company will figure a certain failure rate into its investment model that ensures the success of the overall program. When this type of transaction is conducted properly, each party will benefit.

How Will I Use the Money?

Before you sell your structured settlement, it is a good idea to have a solid plan for how you will spend the money so that you don’t end up spending it quickly and having no income. Some people sell their structured settlements in exchange for money to start their own business. Other people use the money to create a scholarship or endowment fund. It may make sense to sell a structured settlement to pay off your debts so that you don’t have to pay interest any longer. If your debts are high-interest, you could save hundreds by paying them off completely.

How is My Settlement Set Up?

When a person agrees to receive a structured settlement, the money is put into an annuity that pays the recipient each month. Every state has different laws regarding settlements and annuity contracts, so it is essential that you understand the way your settlement is set up as well as the laws in your state before signing a contract to sell your structured settlement payment rights. Most states are have laws based on the Model Structured Settlement Protection Act but your state may vary slightly. To view each State’s Structured Settlement Protection Act, click here.

Choosing a Company to Buy My Settlement

There are many companies that will gladly offer to purchase your structured settlement in exchange for a percentage of the entire amount. It is important to research the companies you talk to and make sure that they are reputable and are offering you a fair amount for your lump sum payment. Some insurance companies offer their customers options to cash out a structured settlement, so you may want to talk to your insurance company before talking to other factoring companies. Both Clearscape and All State are a good option for people who expect to receive a lump sum payment of less than $10,000.00.

A traditional factoring company is usually the best option for people who expect to receive more than $10,000.00 in their lump sum payments. These companies are usually able to offer a lower discount rate which means a greater lump payment for the selling party.