Structured Settlement Transfer
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A structured settlement transfer will probably not be as quick and easy as some advertisements make them out to be. And, there is one simple explanation for that. Although a person may be entitled to the money, he or she can't just sell the settlement to a third-person buyer without court approval. Generally, these types of financial agreements are the result of a lawsuit. Therefore, they should be considered legal agreements that are controlled by the court. Although the money may legally belong to the plaintiff who won a lawsuit, the agreement will involve at least one other person or an insurance company. The other party's rights must be taken into consideration. Therefore, a judge must approve any structured settlement transfer. Also, most states have some sort of structured settlement protection legislation. And, the laws do just what the name implies. Without the act, unscrupulous third-party buyers would be buying settlements and getting rich. Unfortunately, the buyers would be nothing more than predators operating without any sort of control. Their profits would be gained by taking advantage of other people's financial hardships. Even with the legislation, people struggling to make ends meet can be lured in and duped out of their money by a sharp tongue. "Do they not err that devise evil? But mercy and truth shall be to them that devise good. In all labour there is profit: but the talk of lips tendeth only to penury. The crown of the wise is their riches: but the foolishness of fools is folly." (Proverbs 14: 22-24)
Basically, five things must happen to satisfy the terms of the protection act before a structured settlement transfer can be approved. First, all sales terms must be clearly written out in the contract. Get everything in writing because verbal agreements are useless. They won't hold up in court. Second, a person must be provided a grace period in which they are permitted to change their mind and back out of the transfer. Third, a person must be advised in writing that they should seek professional financial advice before entering in to an agreement. Some states allow this part to be waived. Check state law for specifics. Fourth, a judge must hear the case. Finally, a judge must issue a court order approving the sale to a third-party buyer. For the protection of the individual, most states make it difficult, not impossible, to complete a structured settlement transfer. Some agreements contain anti-sale or anti-transfer language. But, this doesn't necessarily preclude the agreement from being sold. Even with anti-sale clauses written into the contract, a judge can determine that the transfer is in the best interest of the individual and approve the sale.
If approved by a judge, a person will usually be allowed to sell all or part of their payments, which are a financial agreement that a plaintiff accepts as a resolution to a personal injury claim. Generally speaking, the agreement will include a schedule for when payments will be made. Some online research indicates that once the transferred payments are paid to the third-party buyer, all remaining payments retained by the original owner will resume. Structured settlements are a relatively recent development in the legal world. An online search indicates that they date back to about the early 1980's. Several countries in addition to the United States permit payments as an alternative to lump sum payments. A structured settlement transfer does have many advantages. Obviously, having a large sum of money all at once will open a number of financial doors. The money can be used for such things as paying off bills, paying college tuition, or even taking a dream vacation. Once a person has received the cash from the sale, he or she can basically do with it as they please. Perhaps a small celebration of sorts may also be in order because getting the money through a structured settlement transfer is not going to be quick and inexpensive.
Third-party buyers involved in the structured settlement transfer are out to make a profit. So, despite what a catchy television, radio, or online advertisement might say or suggest the buyer is not really concerned with the welfare and best interests of the person selling the structured settlement. Obviously, the financial institution will want to get the settlement for as little money as possible. Therefore, the agreement will be purchased at what is known in economics as present value. Because the world of finance and economics are in a constant state of fluctuation present value will most likely be far less than the total amount of all future payments. Also, application fees, legal fees, and closing fees will increase the cost of the sale. Since the transaction is a legal issue, don't expect it to get processed quickly.
Some online legal sites estimate that a structured settlement transfer could take as long as 60 to 90 days to complete. Also, taxes are not paid against the settlement payments. However, some websites offering information on settlement transfers suggest that money received from the sale may be taxable. Check with a tax, legal, or financial expert for specifics about taxes. Once the initial paperwork is completed, a judge will thoroughly examine all aspects of the case. As part of the review, the judge may also inquire about the intended use of the funds. If the judge determines that the transfer is in the best interest of the seller, he or she will issue a court order approving the sale. Keep in mind, once the judge approves the transfer, an agreement is signed with a third-party buyer, the grace period has ended, and a lump-sum payment has been received, the rights to the settlement may be gone for good.
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