A responsible buying/factoring company provides full disclosure on policies as mandated by Nevada structured settlement laws, provides options and flexibility to annuitants, advises annuitants on how they can avoid selling their settlements, uses a fair discount rate, and works together with annuitants’ advisors to recommend the best courses of action.  In some cases, it may be best to sell just a portion of their structured settlement streams in order to get a smaller lump sum of money, but still retain a stream of future payments for long-term financial security.  In other cases, a settlement sale would be the best option for a client in dire straits, or a person’s life and circumstance may have changed so completely that the original settlement would not provide continued long-term value to the annuitant.  Every situation is unique, though once an annuitant sells their structured settlements and receives a lump sum, they cannot go back to structured payments again should they decide to change their minds in the future.

Perhaps the most unfortunate situation from a financial standpoint is that some annuitants sell their settlements to companies who are strictly profit-driven, and do not take the seller’s interests into consideration.  Such businesses choose to prey on the public’s desperation, lack of information, and leverage our culture of instant gratification to reel sellers in.  Consequently, these companies end up taking a large cut of the annuitant’s structured settlement assets upon sale without necessarily providing any greater additional value or insightful solutions to help the client.  At Strategic Capital, they do not encourage annuitants to sell their settlements if it is not the best option.  In fact, they regularly demonstrate to clients how they can avoid selling their payments, because in some cases, obtaining a loan outweighs selling their settlements.  They also encourage consultation with financial and legal advisors, preserve as much of the annuity as possible for clients, provide the lowest possible rates and minimize transaction fees.

Once an annuitant has signed an agreement, the original trial attorney is notified of the court hearing but is not obligated to be involved in the factoring transaction and may choose whether to appear or not. However, the original attorney and his or her staff have the ability to play an important role prior to the client signing such an agreement. Many clients in need of money and considering selling their structured settlement payments will contact their original attorney or structured settlement broker to ask for help.

Here is where legal professionals play their most important role. Selling structured settlement payments is an important financial decision and should be made with careful deliberation. The original attorney or structured settlement broker has the opportunity to provide guidance and refer the client to reputable factoring companies who will treat both the client and the original structured settlement with respect and care.

By Cam Mears.

The recent denial of a factoring transaction by a New York judge has received a lot of attention (see judgment here).

Allia Rahman needed cash to pay tuition for her last two years of college, but she had no assets and no access to credit. She did have a structured settlement, though, so she called the number she saw on TV and agreed to sell her payments to a factoring company.

The transaction required court approval pursuant to New York’s Structured Settlement Protection Act, which says that the court must find the transaction to be in the best interest of the annuitant.

The judge did not approve the deal. He cited the transaction’s high 17.8% interest rate and the fact that Rahman was “selling her right to guaranteed payments for a fraction of their value.” Further, he proposed that the New York Legislature consider a cap on factoring company rates.

What About the Needs of the Annuitant?

This case has generated a lot of anti-factoring commentary, but it is troubling that no one seems interested in how Rahman is supposed to pay for school. Isn’t that the main issue?  Rahman’s needs were legitimate; she was not seeking to “start a business” or buy a truck. What will she do now?

Further, why Rahman had a structured settlement in the first place was not addressed.  Was she the injured party or a beneficiary?  And how did her current tuition needs fit with the ongoing needs addressed by the structure?

How Can Factoring Companies Help People?

All factoring transactions are subject to state SSPAs. It should also be the job of the factoring company to determine that the transaction is in the annuitant’s best interest, and that their needs are being met, before proceeding to court.

I work on referrals from attorneys and structured settlement professionals. I do not advertise or encourage people to sell their structured settlements.

When I help annuitants I seek to understand the situation and explore alternatives to selling their payments. I explain the unique value of a structured settlement. I advise that selling should truly be a last resort. When selling payments makes sense, I propose a plan that preserves as much of the structure as possible while meeting the annuitant’s immediate needs.

The deal that was denied was for $12,500, at a discount rate of 17.8%.  Based on the information provided in the court papers, AND assuming selling her payments was the best option, I would have offered Rahman significantly more, at a significantly lower discount rate.

What Can You Do?

A structured settlement should be forever, but despite the best planning sometimes things change. If you don’t provide guidance to your clients when they ask about selling structured settlement payments, all they have is the number on TV. They run the risk of having the same experience as Allia Rahman.

Call me and let me help you help your clients

For a free consultaton,

call Cam Mears at (866) 241-6111

 or email cam.mears@strategiccapital.com

Creating a Structured Settlement is arguably the most responsible approach to protecting a client’s projected financial needs. The decision to accelerate a portion of it should involve an approach which is just as responsible.

Offering assistance in a fair and respectful manner is where Strategic Capital begins helping your client. We don’t just take the order. We inquire about current living costs and help annuitants think through their needs.

When a client believes they need the cash Strategic Capital will help them carefully think through how to get it.

We look at more than the sale of a structured settlement.

Experience the Difference.

Knowing how it will impact the future as well as the current situation is very important.

Here are some of the ways we help our clients make the most of their unique situation. We take the time to better understand client needs with our UCS* client-focused process. With the client’s input, we help them think through present needs with future needs. We discuss scenarios like “will there be enough to pay rent, car payments, etc if you sell this portion?”

Regardless of the REAL situation, clients believe they need the money – now. And the reality is – that many need the money later too.

Creating the Structured Settlement is arguably the most responsible approach to protecting a client’s projected financial needs.

The decision to accelerate a portion of those future payments should involve an approach which is just as responsible.

We show people how to get the most from their future cash payments.