The last post described the role and benefits the “primary market” plays in the structured settlement industry. Today’s post will focus on the secondary market.
The secondary structured settlement market helps those individuals that have received a structured settlement but have had a “life change” or pressing financial need for a larger sum of cash. Examples may be someone going through a divorce or having a child that will be entering college or the accumulation of debt.
When a recipient has an immediate need for a larger sum of cash then their settlement payments provide, they have the option of converting their future payments to cash.
The secondary market not only meets the immediate need for cash but also provides flexibility so that one can choose to sell some or all of their payments depending on their situation. If they choose to sell some of their payments they will receive a lump sum payment as well as some of their continued payments for the original structured settlement.
Popularity: 67% [?]
Share This
There are two sides to the structured settlement industry that often cause confusion. The next two posts will examine the differences between the “primary market” and the “secondary market” and the value each provides.
Primary Market
The primary structured settlement market helps negotiate structured settlements between an injured party and the defendant (often an insurance company). If the defendant offers to settle the case with a financial award the plaintiff often will have a choice of receiving a cash settlement or a structured settlement. A structured settlement is set up to make periodic payments to the injured party to help them meet their ongoing financial needs.
A “Primary Market” broker will help negotiate the terms of a structured settlement working with the injured parties attorney and legal counsel for the responsible party.
Structured settlements are widely accepted as an excellent financial arrangement with an estimated 97% of all settlements staying intact over the life of the agreement.
However, in some cases a structured settlement recipient may have change in their life circumstances which changes their financial needs that their settlement can’t meet. In these few cases the individual can consider converting some or all of their future payments to a lump sum in the secondary market.
Popularity: 45% [?]
Share This
The first state to pass legislation enabling one to convert future payments to cash was Illinois in 1998. Since then 46 states have passed “transfer statutes” making it not only legal but easy for one to receive a lump sum payment for their settlement.
The four states that do not have legislation allowing for the sale of a settlement are:
● Wisconsin
● North Dakota
● Vermont
● New Hampshire
If you live in one of these four states you still likely can convert your payments into cash. Accommodations can be made to allow for this, contact a structured settlement transfer company for further assistance.
Popularity: 45% [?]
Share This
When an injured party agrees to a structured settlement the payments they receive are tax free of both federal and state income taxes.
One myth is that selling your settlement payments will cause your tax status of the settlement to change. This is not true. When one sells some or all of their future payments for a lump sum of cash the money remains tax free. There are no negative tax implications to selling your structured payment.
Popularity: 45% [?]
Share This
This post will focus on the legal process you can expect to unfold during the sale of your structured settlement payments. As mentioned in the previous post it is not typically required to have a lawyer present at the court hearing unless you live in the few states that mandate it. The steps in the legal process are handled by the company you are transferring your payments to and include:
1. Contact local legal counsel
There will be an attorney present provided by the company you are working with to convert your payments to cash. The attorney will handle the process and the proceedings on your behalf.
2. File petition with the court
The attorney will file a petition with the court regarding your request to sell some or all of your future payments.
3. Requests a hearing and court date:
The attorney will request a court date for a judge to review your case.
4. Send notice of transaction to all interested parties:
A notice is sent to all interested parties to inform them of your intention and of the court date.
5. Go to court:
The attorney will handle the proceedings and request the judge to approve the sale of your settlement payments.
6. Receive signed order:
The judge (typically) will approve your request and sign an order allowing the transfer of your future payments into cash.
Popularity: 44% [?]
Share This
The process of selling structured settlement payments for a lump sum requires going to court and receiving a judge’s approval.
However, whether or not you need a lawyer is primarily up to the state you live in. Most states do not require the recipient to have legal representation. Although, the company you are working with to convert you payments to cash will have a lawyer present to assist in the proceedings.
There are, however, eight states that do require you to have a lawyer with you at the court hearing:
● Alaska ● Maryland
● Delaware ● Minnesota
● Louisiana ● North Carolina
● Maine ● Ohio
In states where an attorney is required you can expect some help from the company you are working with to sell your payments. They will assist with the court and legal process to make the transaction easy and quick.
Popularity: 27% [?]
Share This
A structured settlement is the financial award resolving a personal injury case that makes ongoing, periodic payments to the injured party to take care of their financial obligations over time.
Structured settlement plans are largely successful in accounting for all the future needs of a recipient but there are always a few exceptions. Life events can change ones financial position or needs requiring a larger amount of cash then their payments provide.
There are many reasons why a settlement recipient would want to sell their future payments including:
Debt/Bills: Pay off mounting credit card or medical bills piling up creating a large financial burden.
Education: Pay for a child’s college education.
Housing: Make a down payment on a home to receive affordable monthly payments.
Whatever the reason, it is possible to sell your future payments for cash. In addition, you have the flexibility of selling all of your future payments or just a portion. If you only sell some of your structured settlement payments you can receive a lump sum cash payment and still receive some of your future payments.
Popularity: 26% [?]
Share This
While it is common for structured settlement recipients to transfer some or all of their future payments for cash it is not an instant transaction. There is a process that includes getting court approval to exchange future settlement payments for a lump sum cash payment. There are companies that specialize in guiding you through the process making the transaction easy. The following are some of the typical steps in the process:
1. Sign a contract that outlines the number of payments you wish to sell and the amount of money you wish to receive.
2. Provide any supporting documentation regarding your settlement
3. Schedule a court date to request the approval of the sale of your future payments
4. Attend court and receive the Judges approval for the transaction
5. Receive a lump sum cash payment by check or wire
The process can take 6-10 weeks depending on how busy the courts are at the time of your request.
Popularity: 26% [?]
Share This
If you have a structured settlement and are considering selling some or all of your future payments for cash you should be aware of the process involved.
Structured settlement terms are agreed upon by the involved parties and then approved by a Judge. If you wish to sell your structured settlement in the majority of cases you will need a Judges approval. However, there is nothing new about transferring future payments for cash and there are companies that specialize in purchasing structured settlement payments. These companies will guide you through the process and make it easy to receive a lump sum cash payment.
Popularity: 24% [?]
Share This
A structured settlement is an arrangement following a personal injury case. While in the past many claimants who have settled a personal injury case may have received their settlement in full, today they may agree to a structured settlement. A structured settlement allows for the payment of the settlement through payments made on a regular basis.
The structured settlement payments are made through a third party annuity that is set up for this purpose. Those who are responsible for the payments make them directly to the annuity that in turn makes the regular payments to the claimant.
However, there may come a time when the money from a structured settlement would be more useful to a claimant in one lump sum; and so at this point they may decide to sell their future structured settlement payments in exchange for this lump sum of money.
If it is a claimant’s desire to sell their structured settlement payments they may work with a reputable purchasing company to exchange all or part of their future payments in exchange for a lump sum of cash.
Popularity: 25% [?]
Share This
