The financial markets are among the most unpredictable, only matched in the degree of uncertainty by the average human’s life. Really, you never know that the future holds. Sometimes, the most dismal looking investments can turn into hens that lay golden eggs for several years at a stretch, and in some cases even something as secure and safe as a structured settlement has to be liquidated to meet sudden needs of cash. As big a concern as a situation that forces you to sell your structured settlements off may be, you can’t afford to sway in the flow of emotions and worries and lose control of the selling process. In fact, you need to be careful right from the first to the last task required in the task of selling your structured settlements off. There are at least a few pitfalls that keep on making unsuspecting and careless sellers fall prey to them. This article intends to make you aware of such pitfalls, and equip you with the necessary information to steer yourself around them.
Do not enter the all or nothing mode
It might not be too far-fetched a possibility of you insisting upon selling off your entire remaining structured settlement in order to fund your immediate cash need. This is mostly a result of lack of information with the sellers. There have been cases wherein sellers have parted with their entire settlement amount, without even needing it all in the form of immediate cash. It is possible for you to sell only that part of your settlement that is required to raise the required amount of cash to manage your contingency requirements. Apart from this, there are other means and methods of selling off your structured settlements, depending upon the flexibility allowed in your structured settlement contract. Moreover, there is a lot of financial logic in a choice of not parting with the entire settlement amount that remains to be paid.
By converting only the requisite proportion of the settlements, you ensure that you continue to enjoy the long term benefits of structured settlements. You can either explore the possibility of working with smaller amounts of annuities, or be content with a period, in which you don’t receive any annuities, after which the income stream resumes like before. So, make it a point to learn more about the kind of sales your structured settlement contract allows, and make a choice that doesn’t completely burn out your future requirements.
Don’t even think of ignoring the legal aspects of a structured settlement sale
The structured settlement purchasing industry is a heavily regulated one. Whereas this augers well for sellers who are not too technically adept at handling legal processes and substantial sales, it also comes with some peripheral considerations for sellers. For instance, you would have to consider the legal viability of going ahead with a structured settlement sale approval request. There are certain structured settlements that are not allowed to be converted into cash. Then, you would need to take the tax implications of the sale into consideration. You might or might not be the beneficiary of tax exemption once the structured settlement is converted into cash.
Be very clear about how much you need before putting in a court approval request
A very common pitfall that structured settlements sellers find hard to maneuver around is finding the precise amount they want in cash to handle their contingency needs. However, not being certain about the amount desired is bound to make life tough for these sellers. This is because structured settlement sales have to be routed through the court approval process. Generally, it is seen that a court approval could take between 6 to 8 weeks. However, the point in time where you have to mention the amount you are looking for in cash comes pretty early in the entire selling cycle, and the waiting period follows it. So, if you realize a miscalculation at a later stage, or find the amount converted into cash falling short of what is required, there will be a trouble laden path of going back to the court, and possibly having the approval time period extended well beyond the expected norms. So, invest all possible intelligence in working out your needs. This will save you time as well as money.
Don’t take anybody’s word, and put it in writing
There are a lot of buyers of structured settlements who offer you free quotes over the phone. Some even send you a digitized copy of the quote. However, you really need to have such copies attested or the quote mentioned in writing to be able to proceed further. There are several cheap tricks adopted by structured settlements buyers, such as not telling you about the lesser obvious costs of the transaction till you are stuck with the seller. Beware of such unscrupulous and shady buyers, and always insist on quotes that have some legal standing.
Some questions that will point out all pitfalls to you
Here are some useful questions that you would do well to seek answers for before progressing much into the structured settlement deal.
- Are you being offered anything substantially more than the bare minimum that you would expect from the settlement? If no, why?
- Are you getting any amount of cash up-front for the sale? Has this buyer ever given upfront cash for a structured settlement purchase?
- Are you aware of all the charges and fees? Is the amount being quoted by the structured settlements buyer the bottom line figure?
- Will this sale be compliant with state and federal laws governing structured settlements sale?
- Have you accounted for the tax implications of the sale?