Why Purchase Structured Settlements

Why Purchase Structured Settlements

For many people it is a great idea to purchase structured settlements instead of agreeing to a lump sum payment. These settlements are signed after the defendants accept their fault and are either ordered by the court to pay the claimants compensation or agree to such an arrangement in an out of court settlement. There are two types of compensation available with the first one in the form of a lump sum payment and the second one comprising of regular installments stretched over years or the life time of a person.

In many cases it is better to opt for these settlements for a variety of reasons. The financial assurance of receiving regular payments over years and decades eclipse the importance of a single lump sum payment that you might spend in a few months. Also, people suffering from debilitating injuries need life-long treatment and they cannot finance that with a single payment.

Financial stability

The best feature of structured settlement plans is the financial stability they offer. If you have sustained a major injury such as one related to the backbone or legs, then you will need regular medical treatments. If you agree to a lump sum payment then the money will quickly run out. It is difficult to manage large amounts of money and spend them cautiously. This will drain off your resources and you will be left with little to pay for subsequent medical treatments. If, however, you purchase structured settlements then it will be guaranteed that you will receive a fixed amount every quarter, six months, or a year. This will enable you to pay for medical expenses even after ten years of signing the deal.

Better management

Even if you don't have many medical expenses, there is always a chance of splurging once you have money. Your injuries will heal if they are not of a debilitating nature but you will lose your money for other expenses. It has been observed that more than half of those receiving lump sum payments spend the entire worth within a year or two. A regular payment, on the other hand, will ensure that you have money after five or ten years. If you have signed a life-long plan then this will be valid until your death.

Quicker payments

If you purchase structured settlements then you will be able to receive payments quickly. Defendants find it more difficult to cough up a large amount of money then paying in smaller chunks. These types of settlements are arranged and facilitated by insurance companies and this removes any chances of fraud if you have signed up with a reputable institution. You can also purchase structured settlements from more than a single company to ward off any future chances of nonpayment if one company goes bankrupt. There are safety clauses in annuity agreements that will protect you from any such scenarios but it is better to have a contingency plan at the ready.

You can thus choose structured settlements to overcome financial difficulties and finance medical expenses over many years.

Structured Settlement Laws in Georgia What to Know Before You Sell Annuity Payments

Structured Settlement Laws in Georgia - What to Know Before You Sell Annuity Payments

When a plaintiff settles an ongoing case for a large sum of money, the plaintiff's attorney, the defendant or the financial advisor who has been a part of the proceedings might propose installments over payment of a lump sum. Settlements, which are paid in installments, are known as structured settlements. Based on your needs, you can choose to receive these settlements, or sell a part or the the annual payments in whole.

Although there are laws in two-thirds of the states in the U.S. to restrict the sale of structured settlements, according to the Georgia Structured Settlements law, you can trade annuity payments for upfront cash.

According to the Statute and Bill # O.C.G.A. 51-12-71 (GA H.B. 792), which was enacted on 6/4/2003 and is effective from 7/1/2003, the law, permits the sale or assignment of Georgia payment rights, subject to a court's review and approval based on showing that the proposed transfer is in the consumer's "best interests," taking into account the welfare of the consumer's dependents (if any). However, it requires certain disclosures and other consumer protections.

Throughout the state of Georgia, you can execute two types of structured annuity purchases, full and partial. When you choose to sell the full amount of your future settlement payments, it is known as a full purchase. When you sell a part of your payments, you agree to sell a part of your annuity over a certain time period.

Here are some of the common reasons clients choose to sell their structured settlements in Georgia:

Long due credit card payments Home or car purchase Rising medical expenses Investment Unemployment Vacation

Do you feel that you want to sell your structured settlement for any of the reasons listed above? It helps to know the law in detail, or consult a financial advisor or attorney, who will be able to take you through the process. You need to be on guard for potential exploitation in relation to the settlement too. Exploitation in the form of overstated value, greater commissions, and consider your life expectancy before you get into any agreement.

Should I Sell My Structured Settlement Payments

Should I Sell My Structured Settlement Payments

A common question from people who have annuities and structured settlements is, "Should I sell my structured settlement payments?" When you do this you get cash now while the person who buys the payments will collect the future payouts. Here are some things you should consider when trying to decide on selling.

The first is if you need the money now. In some cases it makes more sense to keep the settlement payments because they will give you long term financial security. But in many cases the small payment amounts aren't enough to cover your immediate needs. If you are paying on high interest credit cards, a large lump sum payment would let you pay them off and be debt free. Large medical bills could also be paid off with the cash payment you would receive should you decide to sell your structured settlement payments. If you're unable to work, you may face losing your home or being evicted. A lump sum payment would fix this problem.

Even if you've been happy with your settlement in the past, things change. A new medical problem, a job loss, a move, a new child, or a broken down car might all require you to have cash now. In these cases it makes more sense to be able to pay in cash than to put everything on a credit card. Credit cards keep increasing interest rates making it harder to make payments.

Any time you have a structured settlement or annuity you can settle it for cash. Some of the types of cases include a wrongful death settlement, a personal injury structured settlement, a lawsuit settlement, a structured settlement annuity, or a medical malpractice settlement.

Only you can answer the question "Should I sell my structured settlement payments?". It's important to consider all of your options. You should also trust the company that is buying the payments from you. Make sure they are established and reputable.

When you receive cash from selling a structured settlement payment, be prepared to spend or invest the money wisely. By planning beforehand you will pay off what needs to be paid and will be using the money in a wise manner.

Selling Structured Settlement Payments Part 2 Understanding the Present Value of Future Payments

Selling Structured Settlement Payments Part 2 - Understanding the Present Value of Future Payments

As called for in a structured settlement, individuals are designated to receive future payments. The payments are issued via an annuity purchased from a large, relatively safe insurance company. Recipients of structured settlement payments sometimes decide that there is an important need to receive settlement funds before the scheduled payment dates. This can be done pursuant to an assignment process that is regulated by the law. At some point in that process, the seller must agree to a price.

What then is a reasonable price for money scheduled to be paid in the future? How does the "market" determine that price? An informed seller can feel protected if they understand two things: 1) The method used to determine the Present Value of a future payment, and 2) The absolute need to confirm that the competitive marketplace has played a role in determining that Present Value.

The Present Value is based on a mathematical discounting process taking into account the amount of time between now and when future money is due. A payment is therefore "discounted" from its future full value back to its Present Value using a discount rate plus the passage of time. A financial calculator, easily found online, will determine the Present Value of any future dollar amount. The calculation requires input of the future value (the amount(s) scheduled to be paid under the settlement), the date that you are scheduled to receive the payment(s) being sold, and the discount rate (interest rate) being charged. Anyone with a mortgage payment, or a car payment, already understands the concept (whether they know it or not). The Present Value of a series of car payments was the price paid for the car (minus any down payment). It is a given that the total of the car payments is more than the amount financed, due to an interest charge. In the same way, the future settlement/annuity payments will be more than a seller receives today due to the discount/interest charge used by the purchaser to create the Present Value. The Present Value is the price received for the future payments.

It is very important for the seller to make sure that the market, made up of all interested purchasers, provide the lowest possible interest charge. Competition takes care of that, as it does for the sale of anything. Summary: Sellers of structured settlement payments can feel comfortable that the sales process is regulated by the law, but the individual seller is fully responsible for forcing the market to work in his or her favor.

A Structured Settlement

A Structured Settlement

Process for Receiving the Money

After a few years of payments a structured settlement company may come into the picture. They will suggest an agent who will buy the structured settlement contract at a lower price than the settlement value. The complainant will need to do this in order to acquire a lump sum of money. If the complainant neglects this matter, the company may refrain from repayments as stated in some settlement contracts. Therefore, the complainant must read the contract to make sure they are following rules set down.

The structured settlement company will be happy if you follow their structured settlement contract. Even though, the contract may be sold for a lower price but you could still gain a large amount of money if you choose to be paid in a lump sum of money. On the other hand, you can also search for a note buyer to fix the issue related to your contract. The note buyer earns their profit for a longer period gaining interest on the contract but they can easily sell a note. They can also reinvest in the future.

Five Things to Consider in Selling your Settlement

Since you already know the process for receiving the money, its time to know the things that are needed to be considered when engaging in structured settlements. Benefits and disadvantages are the first things to be considered when selling.

1. Legal Restrictions

This is the nature of some settlements contracts, so read carefully and have a legal representative look it over too. Just like a legal document, there are legal restrictions that need to be followed by both parties.

2. Contractual Restrictions

Aside from having, legal restrictions some contracts will be valid only for one client. Therefore, it would be difficult to resell them once the contract is over.

3. Tax Considerations

He or she may pay less tax or even be tax-free totally. He or she may pay less tax or be tax-free when he or she decides to be paid by installments. On the other hand, if he or she decides to go for a lump sum of money, he or she may be subject to tax liability since he or she will receive a large amount of money.

4. Low Offers

Since you will receive a contract or a note, you need to seek for low offers. To seek low offers, you can compare prices and choose the lowest price.

5. Seek a Lawyer or an Accountant

When reviewing documents you need to find a good lawyer that specializes in these types of contract. By letting a lawyer review the contract, you will be rest assured that your rights are being protected in case of future complications. If you needed the sale of your structured settlement to be approve in the court, your lawyer can lend you a hand in the process. On the other hand, an accountant can help you decide between the options of installments or a of lump sum of money. They can help you setting up a reasonable price of the structured settlements.

Avoid Having Your Structured Settlement Payments Serviced by a Factoring Company

Avoid Having Your Structured Settlement Payments Serviced by a Factoring Company

Avoiding the servicing of structured settlement payments can net you tens of thousands of dollars or more in the long run. The servicing of structured settlement payments occurs when a seller decides to sell and split some payments. For example, if you are receiving a monthly sum of $1,000 and decide you would like to sell 50% of each disbursement, you are causing a split. Doing so, will create additional record keeping requirements upon the insurance company. Some insurance companies refuse to do this, thus a special need was created upon the factoring industry to service structured settlement payments. This meant that if you decided to split structured settlement payments and your insurance company refused to do so, all your payments would then be assigned to the structured settlement factoring company who in turn would split the disbursements. The "servicing" of payments by the factoring company entails receiving each disbursement from the insurance company and then paying to the seller the appropriate amount. In the example above, the factoring company would receive the full $1,000 monthly sum, and then directly pay the seller their $500 split payment.

At initial glance there does not seem to be much wrong with this set-up. However, if or when the seller decides to sell the remaining payments or portions thereof, this is when costly issues surface. Continuing with the example above, say you now decide to sell all or a portion of your remaining $500 per month payments. Because these payments are being serviced by a factoring company you must now inform this factoring company of your intention to sell your remaining payments. Since these payments were "assigned" to this factoring company, they have control over these payments. This control devalues your remaining payments due to several reasons:

1. Your future payments are worth less because payments are made to you directly by a factoring company and not a highly rated insurance company. This means that the payments are not as guaranteed than if the payments are made by a highly rated financial institution. Prospective factoring companies will now have to further discount this additional risk when calculating the present value of your remaining payments. In other works, the risk of payment default is higher from a factoring company than a highly rated insurance company.

2. Your future payments are worth less because the factoring company that is servicing all remaining payments will use this leverage to provide you with low ball offers. In the event you can obtain quotes from other factoring companies, the quotes will be a lot less due to existence of payment servicing and the additional work and risk involved with purchasing payments from a non-insurance company.

These reasons alone can cause you to lose tens of thousands of dollars or more in the sale of your remaining structured settlement payments.

In addition, one has to be weary of situations when your intent is not to have any remaining payments serviced by the factoring company. This happens when payments are not split, but when you sell only parts of some of your future payments, and the factoring company gets you to assign all remaining payments even when not required by the insurance company. Even though the servicing of payments was totally unnecessary, the goal of the factoring company is to lock you into an unsuspecting position and to potentially secure future business from you in the event you should decide to sell any or all of your remaining payments.

The practice of servicing payments is not new and many factoring companies engage in it including J.G. Wentworth and Peachtree Financial Solutions. Regardless of their reasoning, including facilitating the sale of structured settlement payments particularly in cases when the insurance company refuses to split payments or to secure future business by locking in clients by unnecessarily servicing their remaining payments, the fact is that the remaining unsold serviced payments will be heavily devalued.

Even though you may have zero interest of selling any remaining payments, any questions you may have surrounding your structured settlement annuity policy, will now have to be directed to the factoring company and not to your insurance company.

Knowledge is power. You can protect yourself by knowing how the servicing of structured settlement payments can affect the value of your remaining unsold payments.