You’ve recently won a legal case, and you get approached by several companies that purchase structured settlements. You’ve heard all about them and their bad name, so you should just run a mile, right? Well, not in every case – there can be solid reasons to look closer, so read on to find out more…
Facts about Purchase Structured Settlements
So, the first question to ask is – why they do it! The answer – to make money! There are different ways they make their money, but it can be summed up by two methods. One way is to invest the payments they get. The payments over the course of the settlement will already add up to a lot more than they paid for them – investing the payments just allows them to make even more money!
Or, they can sell the whole package on. The price they pay you will be so far below the full realisation value of the settlement, that they will still have plenty of room to sell on to another company for a quicker profit, and let this new company worry about long term investing.
These companies have a bad reputation – partly due to a cowboy element who do not operate within ethical or legal limits. It’s also partly due to a perception that they are preying on the vulnerable, often people who have medical conditions that need long term treatment.
This reputation is not helped by the fact that they have become a bit like ‘ambulance chasers’, except in this case they are ‘lawyer chasers’.
The existence of your settlement award will be in the public domain, and your details will be a valuable commodity. That’s how the companies that Purchase Structured Settlements will know about you, and come offering you a deal very quickly after your award.
Ok, before we tar the whole industry with a bad brush, it must not be forgotten that there are companies in this field that operate perfectly legally and ethically. It may be that selling your settlement is a good deal for you. Yes, you will get a lot less than the original award, but you will get the cash early.
Maybe the other party in the legal case ‘bumped’ you into accepting the deal, and it appeared the only option. Or, how about if you were lucky enough to win the lottery? Maybe then you would want a chunk of that cash early. Remember you do not have to sell all of the deal in one go; you can sell some of the payments, or parts of each payment, giving you a mix of early cash and long term payments. These circumstances may mean that companies wanting to Purchase Structured Settlements are welcome, rather than being the big bad wolves!
Purchase Structured Settlements Summary
A lot of states in the US do not allow the sale of settlements anyway, in which case the whole question is academic.
If you are allowed to sell, make sure you use due diligence in investigating the company. Using a broker is probably a good move, as they will be well versed in the type of deals around, and the reputations of the companies. Then a lawyer should be involved to tie up the legal loosed ends.
It should not be a quick decision, nor should it be an instant process – anyone suggesting otherwise probably should be avoided, but you don’t necessarily always have to run in the opposite direction just because someone offers to buy your settlement!
February 8, 2011 No Comments