Structured settlements have become ingrained in the US judicial system in settling wrongful injury, personal injury and workers compensation. Structured settlements first appeared in Canada following mass action suits against a prescription manufacturer. The plaintiffs pursued a resolution that would bestow long term financial benefits. The case led to the prevalence of annuities or contracts issued by insurers underwriting a future income stream instead of an instantaneous premium. The notion found its way into the US judicial system in the 1970s. Beneficiaries of structured settlements occasionally find themselves in need of money to counter emergencies. Luckily, the US has a full-blown secondary market for structured settlement payments where tort claimants can cash in for a portion or all cash flows.
Sharon Nelly became the recipient of a structured settlement with a cash flow structure entitling her $1,000 per month guaranteed for 30 years and $300,000 lump sum payments at 5 to 10 years. In 2015, Nelly’s encountered financial handicaps after she was laid off by an online start-up that was under receivership. With unpaid bills, skyrocketing car loan and household expenses, her monthly installments became a drop in the ocean. One day Nelly was ensconced in a couch when she realized she was sitting on a goldmine. She had no lottery winnings but the annuity contract which now sell like hot cakes in the factoring industry.
Sell Structured Settlements
Step 1-Shopping Around for Bids
Nelly started requesting for offers from renowned structured settlement funding companies and narrowed down the highest bid. She scrutinized the contract for the ultimate lump sum payment, deductions and court filing fees.
Step 2-Independent Professional Advice
Nelly retained a firm of attorneys as professional advisors in the transaction. She was advised on the tax benefits she was going to give up but also informed a lump sum present value outweighs future cash flows. The attorneys reviewed the price and discount rate; it was fair, justifiable and tempting in her circumstances.
Step 3- Court Approval
Nelly drove to the local county where to vindicate her application. The structured settlement funding companies evaluate transactions beforehand to ensure they meet the “best interest” standard applied by courts. She was lucky to get judicial approval in a couple of days. Structured settlement purchasing companies then forward the final order to the annuity issuer to divert remittances to the new owner.
Structured settlement funding companies tap lasting financing from a secularized and gilt-edged market. They administer and disburse payments to sellers like Nelly momentarily once the court approves the transactions.
Why Can’t the Structured Settlement Just Pay the Money on the Spot?
Federal law requires all structured settlements to undergo court review or attract the 40% Excise tax levied on the buyer. Accordingly, seeking court approval has become a custom in the trade for buyers of annuities. It also gives consumer protection laws more weight as the judge could halt the transaction if predatory interest rates passed under Nelly’s nose.
Implications of Court Procedures on Her Transaction
With court approval now being mandatory in the US to sell structured settlements, the process has become inordinately lengthy. Filing a court application, securing a hearing date, and dragging clients to court may take months if not weeks. The timeframe means you have to liaise with the structured settlement funding company for cash advances if you’re cash-strapped. The law dictates courts to file the petition; the US has 5,500 county jurisdictions with varying opinions on the secondary market. Some judges subscribe to the myopic “squandering plaintiff” idea and dismiss petitions fancifully.
Top-Three Structured Settlement Funding Companies Perched at the Industry’s Peak
Fairfield Funding is a loyal buyer of future annuities, lottery winnings and structured settlements; they give you an irresistible lump sum price offer, obtain court approval and adhere to judge directions.
Woodbridge Structured Funding acts as a vigilant representative of structured settlement payees seeking to cash in a portion or all future payments in court and insurance domain. They have a seamless processing of transfer agreement and relevant documents.
Stone Street Capital dominates the secondary market of structured settlements with lucrative price offers, discount rates below 15%, personalized financial packages and unrivalled customer support in factoring.