What is the Best Option Available to Sell Structured Settlement Payments?
Based on a recent article on the secondary structured settlement market for structured settlements, you already know that transferring your existing payments to a new provider is perfectly legal. But knowing that you are able to sell your existing payments to another party does not mean that you have to. You may have heard that when a person decides to sell their structured settlement for cash, they do so with the understanding that they will not receive any full value. This may not be the case in all states however. The key to understanding whether or not your payment is properly scheduled for sale depends on understanding the laws and regulations surrounding structured settlements.
One of the first steps that need to be taken when selling your structured settlement future payment is to find a qualified, reputable purchasing company. This means either a bank a private investor, or an attorney that is experienced in this field. After doing your research, ask questions and learn as much as you possibly can about the process. Find out what type of discount factor is applied to the agreement, how many payments will be purchased at one time, and what will happen if you decide not to sell the remaining payments.
Once you have done your research and have a good idea of the answers to the questions you have posed, it is time to move forward. Your attorney or financial advisor will likely be the one who handles the negotiations from the very beginning. While this may seem like the easiest step in the process, it is actually one of the most important. If you have done your homework, you will know upfront what the buy structured settlements price will be from various third parties. This will give you a major advantage over anyone who attempts to buy structured settlements rights without first knowing the true facts.
The factoring companies are what you will ultimately deal with once you sell structured settlement payments. The factoring companies are what acts as the backstop for the buying parties. When you sign the agreement with these third party factoring companies, they are the ones who take the risk of purchasing your settlement for a lump sum payment. They make money by collecting interest and fees on the amount of the debt you have.
The company then takes the monthly payments they collect from you and pays the original creditor. The creditor agrees because they are receiving a lump sum payment and the company saves them from having to continue processing the payments. As a result, they pass the monthly interest on to you and then you receive the whole value of the payments. So in reality, these are two separate transactions when you sell structured settlements.
The process is easy enough to follow. You simply send in all the information the buying company requires and wait for their approval. Once they are approved, the company will then come up with the lump sum amount that will be used to buy the monthly payments from you. It is best to work with one of these companies so that you are guaranteed to get the best option available. They will also ensure that you do not have to deal with interest or late fees that would eat up any of the profit from the sale of the settlement payments.