What if any conditions should you set with the transfer of cash for structured settlements payment rights?
If you need to get cash cash for structured settlement, there are some important matters that you should be concerned with. The long term cost of selling your structured settlement for a lump sum payout are substantial. Most people don’t take these costs into consideration and only focus on the immediate impact of a large cash windfall.
What structured settlements mean to most people is that you can get the best possible settlement for everything you might experience — whether it be a slip and fall case to a lifelong injury that’s going to have serious and long lasting consequences. However, structured settlements aren’t just limited to catastrophic injury. In other words, structured settlements don’t just involve lifelong disabilities.
If you’re in a lawsuit, some services “offer” you the ability to “sell” your structured settlements to them. In exchange, they provide you with a lump sum of cash in the event you need this type of financial resource.
With structured settlement, you as the beneficiary are paid over a number of years in a series of installments, and the payment terms are not flexible. Most often, you can get your payments in monthly installments, in periodic lump sums, or by a combination of the two.
Some of the purchase agreements require the consumer to stipulate to a host of provisions which severely restricts consumers rights and raises questions as to their basic fairness. To forestall suit, however, the contracts often require the consumer to defend and hold harmless the purchasing party in any lawsuit.
Price terms as well are usually pretty unfair to the consumer. In fact, some sales have been shown to be completed with a 12% or 15.8% discount rate, but oftentimes, the rate is as high as 55, 65, or even 75%. The discount rate is calculated on what the purchase price is going to be as well, meaning expenses such as brokerage expenses that the seller of the contract agrees to. That means that the real cost and rate of the transaction is much lower than the company states it is once everything is said and done. The seller does also not have to be informed of the total cost of the transaction — at least in terms that are understandable. And because some of the transfer agreements are so unfair, it would appear that there needs to be something put in place whereby consumers are protected from factoring companies that take unfair advantage of them.
Some argue that structured settlement provide crucial financial protection to seriously injured victims, including: protection against premature dissipation of benefits for injured victims; periodic payments tailored to the living and medical needs of the victim and his/her family; and avoiding the shift of responsibility for the victim’s care to the taxpayer-financed social safety net. They contend that there has been a dramatic growth in the number of factoring companies that are purchasing the future structured payments for a sharply discounted lump sum payment, “taking the structure out of structured settlements. This is a transaction that the injured victim enters into with a 3rd party, completely outside of the structured settlement and without knowledge of the other parties.
According to industry watchdogs, the unscrupulous side of the structured settlement factoring business is rapidly growing. One company announced that it has undertaken more than 7,700 structured settlement purchase transactions with a total value of $370 million. During the first nine months of 1997, the same company undertook more than 3,700 structured settlement purchases paying $74 million for $163 million of structured settlement payments.
All of the careful planning and long term financial security for the injured person and his/her family are unraveled by the company offering quick cash at a deep discount for future structured settlement payments. After almost giving away their only assured source of future financial support, many injured victims will face the prospect of public assistance to cover their future medical expenses and basic living expenses.
Visit Cash for Structured Settlements or Sell Structured Settlement and Discover What They Don’t Want You to Know About Selling Structured Settlements.
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Tags: annuities, Credit, debt, ethics, insurance, investment, law, Personal Finance, Structured settlement, taxes