Purchasing structured settlements involves buying the rights to future payment streams from individuals who have settled lawsuits or received annuities. This is typically done by factoring companies, which offer a lump sum payment in exchange for the rights to future periodic payments.
Here’s a guide to understanding and participating in the purchase of structured settlements:
Steps to Purchasing Structured Settlements
- Understand Structured Settlements:
- Structured settlements are periodic payments awarded to individuals, typically from legal settlements, meant to provide long-term financial security.
- They are often used in personal injury cases, medical malpractice, or wrongful death settlements.
- Find a Reliable Factoring Company:
- Factoring companies specialize in purchasing structured settlement payments.
- Research and choose a company with a good reputation, transparency, and strong customer service.
- Evaluate Financial Stability:
- Ensure the factoring company has solid financial standing.
- Check their ratings from agencies like A.M. Best or Standard & Poor’s.
- Understand the Legal and Tax Implications:
- The sale of structured settlements must be approved by a court to ensure it’s in the seller’s best interest.
- Consult with a financial advisor or attorney to understand tax implications.
Top Companies That Purchase Structured Settlements
- J.G. Wentworth
- One of the most well-known names in the industry.
- Offers lump-sum payments for structured settlements and annuities.
- Known for extensive advertising and a straightforward process.
- Peachtree Financial Solutions
- Provides various financial solutions including purchasing structured settlements.
- Known for flexibility and customer service.
- Offers personalized quotes and payment options.
- Fairfield Funding
- Specializes in purchasing structured settlements and annuities.
- Known for transparency and competitive offers.
- Provides a clear and straightforward process.
- Stone Street Capital
- Offers cash payments for structured settlements, lottery winnings, and other annuities.
- Known for good customer service and competitive pricing.
- DRB Capital
- Buys structured settlements and annuities.
- Emphasizes quick processing and flexibility.
- Good reputation for customer satisfaction.
Steps to Sell Your Structured Settlement
- Research and Contact Companies:
- Contact several factoring companies to compare offers.
- Provide details about your structured settlement, including payment amounts and schedule.
- Receive and Compare Quotes:
- Obtain quotes from multiple companies to ensure you get the best deal.
- Consider the present value of future payments and the discount rate offered.
- Review and Negotiate Terms:
- Carefully review the terms of the offer, including fees and the total amount you will receive.
- Negotiate if possible to get better terms.
- Legal Review and Court Approval:
- Work with an attorney to review the sale agreement.
- The sale must be approved by a judge to ensure it’s in your best interest, which may involve a court hearing.
- Complete the Sale:
- Once approved by the court, finalize the sale and receive your lump-sum payment.
Considerations and Risks
- Discount Rates:
- The lump-sum payment will be less than the total of future payments due to the discount rate applied.
- Higher discount rates result in lower lump-sum payments.
- Fees and Costs:
- Understand all fees involved in the transaction.
- Some companies may charge higher fees, reducing the amount you receive.
- Financial Planning:
- Consider the long-term financial impact of selling your structured settlement.
- Ensure the lump sum will meet your immediate needs without compromising your future financial security.
Conclusion
Purchasing structured settlements can be a beneficial financial strategy, but it requires careful consideration and due diligence. Research reputable factoring companies, understand the terms and implications, and seek professional advice to ensure the transaction aligns with your financial goals.