Sell Structured Settlement Payments Through the Secondary Market
If you decide to sell Structured Settlement payments, it is in your best interest to be informed about what you are doing so you can be absolutely certain that you are getting the most out of your sale. The “structured settlement” simply refers to a group of future payments (the “matches”) made to a claimant or beneficiaries (holders) in various tranches over time with terms and conditions agreed upon in the present. You may have received the payment stream as a structured settlement, but unless you have agreed on a particular payout amount, it will not be taxable by the IRS. Instead, it will be treated as an annuity, like any other investment you make and considered a taxable income during the current year.
When you receive these payments, they are usually based on a discounted cash flow method, where the present value of the payments is used as the discount rate. This discount rate is usually set at a percentage of the total amount of the payment to be made over time. In order to determine the present value of the payment stream, you must use what is known as the discounted cash flow model, which was developed by the Certified Public Accountant, John J. Di Lemme. Basically, the CPA assumes that the money you pay into the structured settlement is growing at a fixed rate, and all of the growth is credited to the account. It then assumes that the interest on this account is tax-deferred until you die, at which point the money would be due from the death of the account holder.
Basically, what you are doing when you sell structured settlement payments is buying a lump sum of money at a discount rate. This is a very risky business because the money can be lost without any financial investment whatsoever. Of course, the risk is higher for companies offering to buy structured settlements, as their future income streams are uncertain, too. Still, there are some legitimate companies out there who do provide a factoring service with legitimate terms and conditions. You just have to be careful to choose a factoring company that will actually pay out the agreed amount on time and in full.
How do you find a reputable factoring company? You can start by going online and doing a search for “factoring companies offer to sell structured settlement payments,” or “factoring companies offer to buy structured settlements.” By the very next page, however, you should be able to find a list of legitimate companies that are members of the Better Business Bureau. You should also be able to contact the BBB to check the legitimacy of the factoring company before proceeding.
Once you have found legitimate companies, it is time to shop around. Before you sell your payments, you should make sure that you are getting the best price possible. Some companies may be willing to take less than the full value of your annuities, so be sure to negotiate well. Structured settlement factoring companies charge a fee for their services, but you need to understand what you are paying for.
When you decide to sell your structured settlements, you need to research secondary market companies carefully. You can use the services of a lawyer or insurance broker to help you with this. It can be a complicated business, and not everyone has access to professionals. But if you do your research, you can find an organization that is willing to work with you to make the transaction as simple and affordable as possible.