Cashing Out

The skinny on getting cash for a structured settlement payment

Very often, individuals who receive a structured settlement do not wish to wait for years to obtain the cash and would rather have it all in one go. Settlement purchasing companies help people to get cash instantly; the cash can be obtained at any stage of the execution of the structured settlement. A person who receives the lump sum is free to use it any way he desires – for education, home, or car.

It is not uncommon for a recipient of a structured settlement to run into a financial difficulty or come across an investment opportunity that promises better returns than a structured settlement. At such times, individuals consider getting cash for their structured settlement and use the money to build their own portfolio of investments. An advantage of getting lump sum cash is that it acts as a hedge against inflation.

Companies that purchase annuities do so at a discounted rate, at the very minimum, the discount is equal to the existing bank rates. Sometimes, purchasers may require a higher discount in order to cover the risk involved and make a profit. One should ideally take the help of a financial advisor who can professionally assess an individual’s income, assets, and monetary obligations. This helps to put into perspective future security as assured by a structured settlement against a lump sum payment.

Companies that purchase structured settlements offer to do so in a number of ways so that an individual can sell different amounts of an annuity. The flexible plans can be tailored according to an individual’s requirements; this allows one to enjoy both a lump sum at hand for immediate needs and regular payments from the annuity. The course of action to be taken while selling a structured settlement depends upon the immediate needs that could include paying off debts, child’s college fees, debt consolidation, or a business venture. Cash for structured settlements can be obtained as a full payment, partial payment, or a shared payment.

A full payment involves receipt of a lump sum for the entire annuity. It is an option when high debts have to be repaid. While selling an annuity that is due well into the future, one should be careful because they do not result in as much money as those annuities that are due sooner. This is because the value of money depreciates due to inflation.

Partial payments can be useful if a limited amount of money is required for consolidating debts or repaying a loan. A given number of payments can be sold off for a lump sum in a partial payment. With a shared payment, one can sell of a portion of a lump sum that is due in a short time. A shared payment enables one to pay off expenses that are going to be incurred in the near future; these may include education fees or the cost of a new vehicle.

Individuals who intend to obtain cash for their structured settlements should obtain the necessary court approvals for the purpose. One should ensure that the transaction complies with state and federal restrictions. Before deciding upon a buyer, one should research a few companies and look out for the best deal possible. It is also important to check the credentials of a prospective purchaser.

How to sell a structured settlement payment

Individuals who choose to sell their structured settlement either in part or wholly are in need of some ready money. Most often, people sell a part of their structured settlement to meet near-term requirements. There are various institutions that buy structured settlements. The transactions can vary in amount from ten thousand dollars to 1.5 million dollars. More than two-thirds of the states in the United States allow individuals to sell structured settlements. According to the federal law HR 2884, annuity owners do not come under any tax obligations as a result of selling their structured settlements.

One should research about various settlement purchasers, check their past payment records and their working relationships with the insurance companies so that the transactions can be approved quickly. Also, the purchasers should be licensed, insured, and bonded. This way if a purchaser goes out of business, the seller can still get his cash. In some states it is mandatory to obtain financial and tax advice, in other states an annuity seller needs to sign a waiver if he does not want to take recourse to financial advice. However, it is compulsory to take advance approval from court according to federal and state laws. Companies that purchase a settlement payout without the advance court approval face a heavy tax.

A judge studies the circumstance of the potential transactions to assess whether the seller actually stands to benefit from the transaction and weighs the effect of the transaction upon the seller’s dependents. Often, owners of structured settlement payments cannot raise credit by other means and have to sell off parts of their settlements. The judges are aware of this and do not object to the transactions so long as the owner is able to show a genuine need for the sale. The seller’s presence in court makes it easier for the judge to arrive at a decision. In an instance where a transaction is denied by a judge, purchasing companies take the necessary steps to create the conditions suitable for the transaction, a seller does not have to bear the costs of this process.

To obtain a free quote from a purchaser, one needs to provide information such as the state of residence, the insurance company, and the payments. If an individual is satisfied with the quote offered, he will need to submit copies of the settlement agreement and annuity policy.

The process of finalizing the contract starts with the purchasing firm sending a disclosure document to the seller; the document explains the terms and conditions that will govern the transaction. The contact is dispatched in a day or two, upon the contract being signed; the court order process begins and can take up to 90 days depending upon the state of residence and the insurance firm. Funds are made available to the individual within five to ten working days of the order being approved.