Structured settlements aid many injured people and their family members by providing consistent, dependable monthly income to them, which helps them make ends meet during their recoveries and helps them pay their medical bills. They also provide those persons who couldn’t work during rehabilitation and depend on the periodic monthly payments for extra income. However, not all structured settlements are equal. It’s important to compare structured settlement payments with the present value of the settlement to make an informed decision on whether to sell.
If you think that selling your structured settlement payments to buyout companies would be a good idea, it’s best to do your research first before you jump into the deal. Structured settlement buyouts may seem like a great way to get rid of your payments, but there are some serious considerations that need to be weighed in before entering into any agreement. Although the process may seem easy, it can come with serious legal consequences. And, because of the risk and potential expenses of buying out your structured payments, you should take time to consider your options carefully before putting your money at risk.
The most obvious reason to why you should never buyout structured settlement payments is the obvious loss of money over time. Once your account reaches a predetermined level of depletion, you will no longer receive payment checks. Instead, you will have to rely on retrieval of the money from your life insurance or other sources. Because these companies are paid only for the actual cost of getting the claim up to date, they will likely pass most if not all of your costs on to the person or entity that is paying the claim. These could include your own medical expenses, ongoing living expenses and, if you are injured, pain and suffering.
Another reason why you should never buyout structured settlement payments is that, while it is true that these payments can be sold for a large profit, the truth is that the buyers will usually receive a substantially smaller return than what their original loaned amount was. This is due to the fact that the insurance company will receive a percentage of the total value of the loaned amount. However, the buyer will receive the lesser amount, because they will have to recoup some of the expense from the current holder of the loan. This means that the buyer is actually receiving a lump sum less than the face value of the structured settlement payments. While you will not receive the full face value of your settlement, you will receive more than you would by simply cashing out your current payments and waiting until an interested buyer comes along.
When you sell structured settlement payments, it is not uncommon for the insurance company to require that you use a cashier’s check to complete the transaction. In addition, they will require you to pre-certify your intent to purchase. This is because they will want to make sure that the present payments that they are receiving are actually worth the amount that you request. If the present value of the payments is less than the buyer of the note, then the seller is not legally allowed to sell structured settlement payments and pocket the difference. Because this requirement is present, you must pre certify your intent to purchase in order to move forward with the sale.
In conclusion, it is important to remember that when you sell structured settlement payments, it is often best to contact a factoring company for assistance. Not only will a factoring company to give you the best interest rate possible, but they will also ensure that you receive a lump sum payment in a timely manner. If you have a legitimate need for cash and are interested in obtaining cash now, then it may be best to turn to a factoring company to help you out. This is true as well as a way to protect yourself should the need arise in the future.