Structured Settlement Buyer

A structured settlement buyer may be an answer for someone who has received lawsuit judgment award or annuity or some other financial long term payment, but needs money right away for pressing needs. Often, these needs are due to legal expenses or medical bills. Structured settlements, or long term payments as they might also be called can amount to a great deal in total, but be a mere pittance as it is doled out each month to the recipient. In spite of an annuity being large, say fifty thousand dollars, the small monthly payments may only be a few hundred dollars. For the recipient who cannot make it on his monthly income and seeks to pay down a mortgage or other outstanding debt to increase cash flow, a structured settlement buyer can come along and buy the annuity for perhaps forty cents on the dollar and give the annuity owner the money needed to increase his cash flow. The actual percentage of the buyout will be different from buyer to buyer.

To understand more fully how a structured settlement works, take the fictional case of a young man who is permanently disabled due to a faultily installed car part that broke, causing a horrific accident and ensuing injury. In the settlement decision, the auto dealer's liability insurance was ordered to pay one million dollars to the man after all legal expenses and non covered medical expenses were met. The insurance company did not want to put out a million dollars that would show up on its books as expense, so it purchased an annuity for one million dollars that would pay for $1666.00 of income monthly for fifty years. But the young man soon found out that despite this large overall settlement amount, the living expenses were going to be three thousand dollars a month. So the man immediately began looking for a structured settlement buyer to purchase the annuity for a lump sum payment.

The numbers were plain and simple for this injured man. The injured individual had to have three thousand dollars a month to pay for the care the man was going to need plus a place to live. In reality, someone that is disabled might want to have a special needs trust fund rather than a lump sum payment, and a conversation with financial planner would be in order, but this scenario is for explanation purposes. This man began searching for a structured settlement buyer and while the man saw some advertising on television across the country, everyone was on the Internet. "Who shall ascend into the hill of the Lord or who shall stand in his holy place? He who hath clean hands and a pure heart: who hath not lifted up his soul unto vanity, nor sworn deceitfully." (Psalm 24:3-4)

When the young man met with the buyer of choice, the injured individual and attorney had done a great deal of investigation. The reputation and the service provided by this structured settlement buyer were excellent so the discussion got down to the core of the issue. Of course one of the first questions out of the injured man's mouth was how much of the million dollars would he actually receive? The risk factors for the structured settlement buyer for this annuity were quite high, mainly due to the longevity of the payout. In fifty years' time, a number of things could occur including the going out of business of the life insurance company, inflation, the value of the dollar, world events and many other risks were mentioned in the discussion. As a result of this assessment of risks, the structured settlement buyer and firm offered the man a five hundred thousand dollar lump sum payment for his annuity.

At this point, the young man had a lot to think about. Fifty cents on the dollar was a bucket of ice water on the hoped for parade, but it was a fairly common figure for an offer made by a structured settlement buyer, especially given the very long term of the annuity life. One of the real human issues in all of this is the make-up of the young man himself. Annuity plans are structured in such a way to provide steady monthly income that would be missed because of the accident. The key word here is steady, but what if the young man might be tempted to take the lump sum and spend it rather quickly. That concern is of no interest to the settlement buyer unless the buyer has a higher calling than just making money.

Further discussion with his attorney led the young man to seek counseling with a financial planner as well as a minister. The financial planner suggested that only half of the annuity be turned into a lump sum, and the minister helped the man work through weaknesses he might have with possessing two hundred and fifty thousand dollars in a savings account. Holders of annuities are not the only ones who may consider the services of a structured settlement purchaser. Lottery winners, holders of mortgages or recipients of insurance settlements will all no doubt at least consider the use of a buyer. So choose wisely when considering a buyer of structured settlements by doing one's research and investigation before signing on the bottom line. Check the reputation and the service quality by asking for references and check with the Better Business Bureau to see how any complaints were handled by the buyer's firm.

Structured Settlement Funding

Structured settlement funding was on the mind of the middle aged couple who had won a three hundred thousand dollar lawsuit and bought an annuity so that the wife could retire and take care of her aging father. But the elderly man had recently died and now the husband had been diagnosed with a potentially life threatening illness and had to quit working. The annuity provided the couple with about two thousand dollars a month, but it was not enough to take care of the medical bills beginning to pile up. So the two sat in an office of a factoring or transaction company that specialized in structured settlement transfer of lottery winnings, annuities, lawsuit judgments and other monthly payment providers. An agent of the company began sharing with the couple the advantages of getting a settlement funding transaction completed so that the couple's immediate needs could be met. The agent mentioned that the couple, with a financial plan to transfer monthly payments to a lump sum would have the advantage of being able to respond to their immediate financial needs. But there were some things he did not want to say, but the agent was mandated by law to disclose.

The Structured Settlement Protection Act of 2002 changed the way factoring or structured settlement transfer companies did business. Before that legislation became law, any person requesting allocated money be changed to a lump sum allocation was often taken advantage of by the companies offering to buy annuities or other monthly or yearly allocated financial plans. Between 1988 and 2002, factoring and transfer companies were at odds with the issuers of such things such as annuities, typically life insurance companies. Often, many holders of structured settlement money had very negative experiences with factoring and transfer companies, including having information withheld, and the fact that lump sum payments could affect, in adverse ways, the tax liabilities of the clients. The Structured Settlement Protection Act placed into law a number of safety nets for Americans facing the same issues as the couple.

The law mandated a number of safeguards for those wanting seeking structured settlement allocations. This legislation demanded that all transactions going through a factoring or transaction company as this couple was doing be approved by a state court, which would investigate to ascertain if the structured settlement transfer to a lump sum payment is good for the client and the client's dependents. Additionally, the issuers of annuities, the life insurance companies, were brought into the loop, contrary to factoring companies' standard policy of years past. Often, the life insurance companies were caught off guard when lump sum settlements were arranged, and the new owner of the annuity was discovered. The Structured Settlement Protection Act also called for the client receiving a lump sum payment to obtain professional counsel on every aspect of the transaction's affect upon the future quality of life for the client.

For the couple looking for immediate help, these safeguards meant not only peace of mind for what they were about to do, but also gave them an appreciation for all the factors going into a structured settlement transfer. After hearing all the information given to them by the agent for the factoring company, the couple decided to go and speak to one of dozens of counselors suggested by the brochures from the federal government. The counselor advised the couple to recognize that the factoring company had only one thing as their agenda, and that was to make money on their situation. To use a company that offered structured settlement funding, the couple would lose at least thirty percent of the value of their annuity. Would the transfer be worth it? "If any man come to me and hateth not his father, and mother and wife and children and brethren and sisters, yea and his own life also, he cannot be my disciple." (Luke 14:26)

Having gone through the structured settlement funding process so far, the couple decided that they still needed to have money now for the financial crisis that loomed in front of the pair. The next step forward was to petition the circuit court for an agreement to the structured settlement funding agreement with the factoring company. The court agreed to the transfer after having seen evidence that the agreement would not affect anyone except the husband and wife and that they had indeed talked to an approved financial advisor. The only remaining question was how long a wait they would have before they received the lump sum on which an agreement had been made. The factoring company told them it would typically be between eight and twelve weeks.

The couple went home that day, delighted that such an option had been afforded to the pair, and that they were privy to all the information that eased their minds. The wife was actually looking forward to returning to work, and began to brush up on the latest developments and skills needed in her vocational field. The husband actually looked forward to the treatments he was receiving because all medical bills not covered by insurance would be covered with the money they would soon have in the bank. For them, an allocated settlement funding company had offered and given the couple a new lease on life. Unfortunately, for many people before them, there were many cases of being taken advantage of, and even ripped off, but sometimes it takes trail blazers going ahead to make life better for those soon to arrive.

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