What Kind of Structured Settlements Are There?
A structured settlement, at its core, is a type of payment made after a lawsuit has been settled. This stream of payments will come from a defendant or alternative party who lost their case. You can use these settlements at your leisure, but without selling them, you won’t be able to enjoy the benefits of the full sum you’re owed all at once.
The types of structured settlements that exist will depend on the type of case you or a loved one was involved in. These cases include:
- Personal Injury.
- Workers’ Compensation.
- Medical Malpractice.
- Wrongful Death.
The payments you receive after winning a legal battle, as described above, have their own variables. Depending on the agreement you, the defendant in your case, and a judge reach, you may find yourself on the receiving end of any of the following settlements:
- Income for Life Annuities.
- Deferred Lump-Sum Payments.
- Step Annuities.
- Percentage Increase Annuities.
- Index Linked Structured Settlements.
- Deferred Defined Benefit Annuities.
- Period Certain Annuities.
- Joint and Survivor Annuities.
- Treasury Funded Structured Settlements.
- Market Based Structured Settlements/Variable Income Payout Structures.
- Structured Settlement Derivatives.
Note that the amount of money you receive as a result of a settlement plan will exceed the amount of money you would receive, should you choose to sell your settlements in exchange for a lump sum. However, sometimes life doesn’t wait for you to be as financially secure as you can be.
Even so, make sure you go into a settlement sale as informed as possible.
Why Consider Selling a Settlement?
Life happens quickly, and with obstacles you don’t always expect. In times of crisis, you may find yourself in need of additional financial support. When those moments arise, you may be driven to sell your structured settlement payments or the other types of payments you’ve been receiving.
Medical Bills or Household Emergencies
For example, say you have to go to the hospital, but you don’t immediately have the funds to pay off the bill. By selling your structured settlement payments, you can pay that bill and avoid unintentional debt. Alternatively, if something breaks in your house that you immediately need to fix, like a broiler in winter, then you can turn to a structured settlement buyer to quickly make the money you need to replace what’s been broken.
On the other hand, selling off your structured settlement payments may help you achieve goals that’ve been long put off due to financial reasons. For example, you’ve always wanted to start a business, and now you just need the money to put a down payment on an office. Or, maybe you have a child who wants to go to college, and selling your structural payments would give you the last financial boost you need to make that a reality.
Regardless of the situation driving you forward, selling off your structured settlement payments will help you regain financial control over your life. That’s the greatest benefit: you’ll be able to meet any financial needs quickly.
Other reasons to consider selling your payments include:
- Mounting Debts: It’s possible that you have debts for a multitude of reasons. Maybe, after college, you haven’t been able to pay back your student loan debt as quickly as you imagined. Alternatively, maybe you have a mortgage that’s cutting into other financial commitments. In either of these cases, you can reach out to a buyer to try and ease those debts. A lump-sum payment that comes as a result of a sale will help you rapidly overcome the debts hindering you.
- Big Purchases: On the other hand, you may be interested in making a big purchase. Maybe you need a new refrigerator, or you want to replace an old car with a newer model. In either situation, or even more expensive situations, a lump-sum can serve you well.
- Investments: If you’re in a financially-sound position, you may be interested in investing some of your money. Instead of playing with the funds you’ve already put into your savings account, you can use a lump-sum to experiment with the stock market. These kinds of situations the best for you, as a seller, since investing often helps you get back the money you would’ve otherwise lost as a result of a buyer’s discount rate.
People choose to sell off their structured settlement payments for a number of reasons, all of which differ based on the obstacles or goals they have in their lives. So long as you’ve chosen the right buyer to work with, you can walk away from a sale able to achieve goals that were previously out of reach.
Do note, of course, that your reason needs to be a compelling and legitimate one. This is especially important, as you’ll be bringing your sale in front of a judge, and that judge can determine whether or not to legitimize the sale. Have the reason for the sale clear in your mind, and take some time (with the help of your applicable consultant) to work out how you’re going to present your argument.
What is the Discount Rate?
Before you go into the process of selling your structured settlements, you should learn more about the payment you’ll receive for your efforts. Since you’ll likely use your newly-obtained cash to solve a long-term problem or see a dream to fruition, it’s natural to want more information about how that money will come your way.
To do this, you need to learn more about buyers’ discount rates.
Discount rates detail the amount of money you’re likely to receive once you sell off your structured payment. The lower a company’s discount rate is, the more money you’ll come away with at the end of a sale.
Well-established structured settlement buyers, including DRB Capital, will have a representative speak with you about the discount rates that they can make available to you. So long as you’ve chosen the right company to work with, you can leave these initial meetings confident in the amount of funds you’ll receive in the end.
What Are Your Choices to Cash Out?
You don’t necessarily have to sell all of your structured settlements in one go. Instead, you can choose to sell a portion of your payments, so long as the buyer in question agrees to receive the percentage.
You’ll receive all of the money from your sale within a month and a half after the sale has been made. Once the applicable amount of time has passed, you’ll resume the original schedule: receiving structured statements and ensuring a long-term income.
Nonetheless, you’ll have to decide early on whether or not you want to sell all of your statements, or only a few.
It’s recommended that you base your cash-out decisions on your financial situation and the needs you feel must absolutely be met.
The Sales Process
Even when you’ve decided to move forward with the sales process, without a consultant’s guidance, you may be unaware of what it looks like. That’s why this guide offers you a step-by-step breakdown of a structured settlement sale.
With this information under your belt, you can more confidently approach any consultants you choose to work with in the future. Note, of course, that each buyer will operate with their own quirks.
However, refer back to these basic steps, and you’ll have a fairly good idea of how a sale will play out. So long as you’ve partnered with a supportive buyer, the sale shouldn’t take long at all.
Step 1: Research Your Potential Buyers
As you get started, you’ll need to scope out the structured settlement buyers in your area. This means researching the multitude of companies currently in operation, who may be interested in purchasing your payments.
Choosing the right buyer for you will depend on your personal interests and tastes. However, do note that the final sale needs to benefit you. As such, you’ll need to ask yourself a series of questions to learn what kind of buyer you’re seeking out.
These questions can include the following:
- How long has this company been in operation?
- Are there testimonials readily available on the company’s platform?
- Does the company have a functional website?
- Does the company have any social media presence?
- Can I reach out to someone who’s worked with this company before for more information about their process?
- What is this company’s offered discount rate?
After visiting your potential buyers’ websites, you should be able to answer most of these questions. If you discover that you can’t, you may want to put the buyer in question aside and look for someone who’s willing to engage in more transactional transparency.
Step 2: Check in with Your Potential Buyers for a Free Quote
After you’ve answered your initial set of questions, it’s time to get in touch with someone from the companies you’re interested in. This means making a call. You should be readily able to find potential buyers’ phone numbers through their websites. If you can’t, or if the buyer doesn’t answer your phone calls, it may be time to move on and find an alternate buyer.
During your first phone call, you should be able to receive a quote. This quote will detail the amount of money your buyer expects you to receive from the sale. Note that you’ll have to deal with discount rates, no matter who you work with. However, if you do a bit of shopping in advance, you’ll be able to work with the company that provides you the lowest discount rate.
Alternatively, tour your potential buyer’s webpage and see if they offer free quotes, sent to you through an online interface. If they do, you can use this resource to develop a better understanding of the deal you may receive. This also saves you additional time making preliminary phone calls.
Step 3: Compare and Choose Your Quotes
Make sure to quote shop. This means calling multiple potential buyers and keeping track of the quotes that they’re able to offer you. Once you’ve completed your calls, it’s time to compare. Ask yourself:
- Who will be able to provide you with the most cash?
- How long will each of the transactions take?
- Do some buyers offer pre-settlements, or will you have to wait to receive your payment?
Based on the information you’ve been provided, you should be able to choose a buyer. When you’ve made your decision, call your buyer back and let them know that you’ve decided to move forward with the sale.
The good news? You won’t have to call back the companies you’ve rejected. Instead, you can focus on moving forward and securing the funds you need to live more comfortably.
Step 5: Fill Out Your Application
Spend the next few hours coming to an agreement with your buyer. Once you have, you’ll be able to fill out a structured settlement sale application.
Any and all structural settlement sales need to be approved before they can go through. To keep your sale in legal terms, make sure you speak with a consultant, your buyer, or your buyer’s representatives.
Professionals familiar with the practice will be able to guide you through the application process and ensure that you’ve filled out all the right paperwork.
Step 6: Wait For Your Application’s Approval
When you’ve completed your paperwork, you’ll need to submit it to a judge. After it’s been submitted, you will wait to be summoned to court. Here, you’ll argue your case. Reasons for selling your structured settlements may include:
- Large future purchases.
- Going back to school or sending your child to school.
- Financial emergencies.
So long as you successfully communicate your need(s) to a judge, you should be able to walk away from your hearing with your sale completed.
Step 7: Wait for Your Money to Come In
After your hearing and approval, the judge in charge of your sale will send an order to the applicable insurance company. From there, it’s the responsibility of the buyer to send you the money you’re owed. In general, it takes between 45 and 60 days for the money from the buyer to land in your bank account.
Finding The Right Structured Settlement Company
How do you determine whether or not a company is the right buyer for your structured settlement payments? Without a strong buyer, the sale you’re investing in could fall through, drag out, or even fail to resolve.
When looking for the right kind of buyer, you’ll need to search for those willing to offer a reasonable discount rate – thereby putting money in your wallet while ensuring they’re also receiving a fair deal. Ideally, keep an eye out for the following features:
- Honesty – Any buyer for your structured settlements must be upfront about the process with you. There shouldn’t be any hiding of potential costs, discount rates, or essential information. Instead, you should know exactly who you’re working with and where they stand, in terms of your financial relationship.
- Consumer Interests At Heart – Companies that buy your structured settlement payments need to have your interests at heart. This means ensuring that you’re receiving as much money as you can over the course of your exchange. While businesses do need to make a profit, selling your settlements is often an indicator of financial distress. A worthwhile buyer will recognize this and work hard to bring you success as a result.
- Informative and Informed – Structured settlement buyers should know what they’re doing, and they should be able to answer any questions you may have about the purchasing process. This means breaking down complex language or processes without diminishing your feelings or intelligence. It also means sharing ongoing details about the process as things develop.
- Prompt Quote Delivery – When you first start to work with a structured settlement buyer, they should supply you with a quote regarding your sale within a short span of time. While not all buyers have been in the game for long, they should be familiar enough with their field to provide you with honest information – without a wait. Getting your money during a traditional structured settlement sale takes long enough, and a good buyer should never exasperate that process.
- Patient – Your chosen buyer should never push you to rush through the selling process. Selling your structured statements is going to take time, especially if this is your first attempt. With that in mind, make sure that your buyer understands your situation, and that you never feel as though you’re speeding through a process that you don’t entirely understand.
Our platform categorizes the companies we represent based on a number of factors, including:
- Experience: When a buyer has an extensive portfolio that you can access, either through their website or upon request, you can be certain that they’re reputable. That kind of portfolio generation is the result of significant experience. While younger companies will be able to treat you well, too, make sure that they’re able to present you with a portfolio that inspires confidence. It’s that experience, after all, that they’ll be bringing to your sale.
- Number of Employees: Large businesses are not always more successful than small businesses. Large businesses, however, have the capacity and funding to hire more staff. The more staff a business has, the more likely it is that they’ll assign an individual caseworker to your sale. That kind of individualized attention bodes well, since it means someone will be there to walk you through any confusion that may arise during your sale.
- Easy-to-Access Contact Information: A legitimate business should make its contact information readily available to all potential sellers. This includes a phone number, address, email addresses of client-facing staff, and so on. If you’re researching a buyer and are having a difficult time determining how to get in touch with them, you may want to pass them over in favor of someone who’s easy to contact.
- Calls Answered: You have to make several phone calls before you can determine which of your potential buyers is right for you. You can’t reach that conclusion, however, if the buyer in question doesn’t answer their phone. If you’re having trouble getting in touch with a buyer, or if you only ever have your calls returned, you may not be working with a reputable buyer.
- Multilingual Staff: While you may not speak a second language, it bodes well when the representatives you’re working with do. Check in and see if non-English speakers are able to work with the employees representing your buyer. That kind of versatility speaks to greater flexibility and reach throughout the whole of your buyer’s company.
- Professional Web Design: As we approach a new decade, the importance of an easy-to-access website can’t be understated. Your buyer’s website needs to be easy-to-use, comprehensive, and modernized. If it isn’t – say, if they’re using a webpage theme that would look more at home on MySpace – you don’t have to dismiss them completely. However, you should dig a little further into their details before committing to a sale. Their lack of commitment to a modern advertising strategy may reflect their lack of commitment to the business itself.
- Up-to-Date Website: In a similar vein, make sure that the information on your potential buyer’s platform is up-to-date. This means checking the publication dates on new blog posts and affiliated social media accounts. If your buyer’s website hasn’t been updated in several weeks or months, then they may no longer be able to purchase your settlements.
- Website Speed: More and more, we’re accessing information about potential buyers from our cellphones. Websites that are meant to be viewed on mobile – or that are meant to be accessible at all – need to load quickly if they’re going to keep up with demand. Check out how quickly your potential buyers’ sites load, with this in mind. If it takes more than 5 seconds for a platform to load, it may be bogged down with ads and thereby of ill repute.
- Ripoff Report Complaints: A Ripoff Report details whether or not the content available through a buyer’s platform is unique. While content will often be repeated online, make sure your potential buyer isn’t plagiarizing before reaching out. This could reflect on poor business practices – and, therefore, how they’ll treat your sale.
- Staff Knowledge: The staff you work with need to be well-versed in their field. This means that they should be able to answer any questions you throw their way while remaining friendly and compassionate.
- Customer Reviews: Customer reputation is everything, when it comes to determining the validity of a potential buyer. Check out what other sellers have to say about the buyer you’re considering. Here, you can learn more about your buyer’s process, discount rate, and customer service, as previous sellers will be able to detail encounters your buyer may not share.
- Past Employee Reviews: No one is willing to dish on a company more so than the employees who once worked there. You can access platforms like Glassdoor to see what previous employees have to say about the buyers you’re considering. If the reviews are positive, feel free to continue your research or get in contact.
Selling your structured settlement payments is a complex process. Our FAQ tries to answer some of the most common questions sellers have when they approach the process.
Can You Sell Any Type of Structured Settlement?
As mentioned, there are several different types of structured settlements. So long as you can take your case to a judge and prove that you have financial need, you are legally permitted to sell off your structured settlements.
Where Can I Sell My Structured Settlements?
Several structured settlement companies can take on your payments. These include:
- DRB Capital.
- Fairfield Funding.
- CBC Settlement Funding.
- Oasis Legal Finance.
- Novation Settlement Solutions.
- Client First Settlement Funding.
- Seneca One.
- Liberty Settlement Funding.
- Singer Asset Finance Company.
- Stone Street Capital.
Should I Sell My Structured Settlement?
This is entirely up to you. Sales are final, and will typically bring in a lump-sum that’ll benefit you at the moment. However, do note that selling your structured settlements will bring in less money than waiting for those settlements to land naturally.
What are situations in which you may be interested in selling your structured settlements, annuity, lottery winnings, or other forms of controlled income? These include:
- When you’re looking to make a large purchase.
- When you have debts you want to pay off.
- When you want to send a child or yourself to college.
- When a financial emergency, medical or otherwise, arises.
Why is a Judge Involved?
When you’re faced with a stressful financial situation, you may feel as though you have no choice but to take extreme measures to fix your problems. Many people in these situations have sold off their structured settlements without considering the consequences.
In response to this trend, national and state legislation was implemented to protect sellers from financial misfortune. These laws state that a judge must be involved when a person looks to sell their structured payments. That judge must not only hear the argument set forth, but approve the sale. That judge will also ensure that the person to whom you’re selling offers you a fair deal.
Are Structured Settlements Taxable?
Structured settlements themselves are not taxable. However, the profit you receive from the sale of your structured settlements is taxable.
That differentiation and the rates placed upon sellers are all the more reason you should work with a consultant when trying to sell your structured settlements.
Professionals who are part of a buying team will help you through the taxation process. Alternatively, they may direct you to in-house or third-party accountants who can help you budget for tax season.
How Long Before I Get My Money?
Different settlement sales will take varying amounts of time. On average, so long as your sale has been completed within the letter of the law, you will be paid for your sale within 45 to 60 days of judge approval.
That said, be sure to reach out to your buyer if you feel like your sale is taking too long. Communication will ensure that your payment arrives when it’s supposed to.
What Happens If the Judge Does Not Approve?
If a judge does not approve the sale of your structured settlements, annuity, or lottery winnings, then you can’t proceed with your current sale. However, that doesn’t mean you can’t return to a judge with a different buyer and a different argument.