Terry Taylor/Past President, National Structured Settlement Trade Association – For nearly twenty years, I have sold structured settlements. During that period, I worked exclusively with plaintiff attorneys and plaintiffs like you to help protect their settlements. Over the years, I have referred some of those clients to Strategic Capital and have seen firsthand their integrity and how they treat their clients.
In 2002, while I was president-elect of the National Structured Settlement Trade Association, we did an in depth study of companies that purchase structured settlements those companies are called Factoring Companies. The practices we uncovered led Congress to pass a law designed to protect people selling their structured settlement by, regulating how factoring companies may purchase structured settlements. What we learned could save you tens of thousands of dollars and endless headaches. Over the next 10 minutes, I am going to share that information with you.
All factoring companies are in the business to make money, as is Strategic Capital. However, the terms of the agreement, the length of time it takes to complete the deal and the amount of money each company tries to make off the purchase can vary greatly.
At Strategic Capital we earn our money by helping our clients, not taking advantage of them. That is why the Consumer Attorneys of California told their members in a letter, “Strategic Capital is an annuity purchase organization that operates in a principled fashion and that is open to feedback. That is why CAOC chooses Strategic Capital if a structure needs to be sold.”
Keep in mind that television, radio and internet advertising costs a lot of money and those companies have to buy a lot of structured settlements, at a very profitable price to pay for those massive Ad campaigns. Strategic Capital doesn’t use television or radio advertising. Unlike those companies you see on TV, Strategic Capital will not try to convince you to sell your settlement, but if you need to, Our experts will work with you to find the best solution for you and try to minimize how much of your structure you need to sell. Most of our clients are referred to us from Plaintiff Attorneys and structured settlement brokers, who are trying to help one of their clients who is in a financial bind.
When you need money and you need it fast, it is easy to just focus on getting the money you need even if it’s a bad deal. I’m going to share with you the things that you NEED to know when choosing a company to buy your structured settlement payments
The questions you need answered:
- What is the process?
- How long will it take for me to get my money?
- How much will you pay for my structured payments?
- Who will service my payments?
- If I decide to sell more of my payments in the future, will the company make those payments to another Structure purchasing company?
- What will the legal fees be on my sale?
- Who pays the legal fees?
What is the process?
- The first thing a company is going to ask is how much money you need or if there are certain payments you want to sell.
- They will probably ask you to send them a copy of your annuity policy so they will have the exact dates and amounts so they can calculate how much they will offer you for your payments. Be careful of those companies that call too frequently during this period. Or, who push too hard to get you to make a decision. If a company is constantly calling you, that is an indicator that they are much more interested in their profit than your well being
- If you accept that offer, they will send you an application and contracts that have all of the conditions of the purchase.
- The Company then is required by law to have a hearing before a judge to request that the purchase be approved. A lot of companies will tell you that the fact the sale will ultimately be approved by a judge, proves you have gotten a good deal. Unfortunately, that isn’t what it means at all. It only means that your transaction has been approved and it tells the insurance company to send your payments to the buyer.
- When the judge approves the purchase the Company will make your lump sum payment to you.
It sounds like a simple process, but any deal involving tens of thousands or hundreds of thousands of dollars is not simple. The legal fees can run up to $3,000 and more. Most companies make you pay the legal fees, effectively reducing what you are receiving for your structure. Strategic Capital pays all the legal fees when we purchase your structure.
Do you remember all the legal papers and their conditions when you originally settled your lawsuit? The contracts when you sell your settlement are no less complicated or important and don’t let anyone tell you different.
How long will it take for me to get my money?
Strategic Capital [www.strategiccapital.com]will have a quote back in your hands within 24 hours of receiving your information. If you agree to move forward, we will have the contracts in your hands the next business day after we receive all the information that we need from you
We will normally have a hearing before the judge within four to five weeks from the time we get the signed contracts. How fast this part of the process moves depends on how quickly you provide us with the information we need. Because the court sets the date for the hearing it is always possible that there can be delays that are beyond our control. That said, Strategic Capital has the reputation of being one of the quickest in the business at getting you the money you need.
It’s not uncommon for some companies to take several months to set a hearing, so check out the company’s reputation for how quickly they navigate the legal approval.
How much will you pay for my structure payments?
A company determines how much they will pay you for future payments by calculating their present value. They do this by applying a discount factor to the future payments. That discount factor is like the interest you pay on a loan. It reduces the value of the future payments by an assumed interest rate.
If you have a $100,000 lump sum payment due in five years and the company uses a 22% discount factor, then they would pay you $33,620 for that payment. A 12.5 % discount factor would make the payment to you $53,700 for the same $100,000 lump sum. That is 60% more than the 22% discount rate and an extra $20,000 for you and your family. The lower the discount a company uses, the better for you.
Who will Service my payments?
Who will service the payments should be every bit as important to you as the amount that a company will pay for your settlement.
Many Life Insurance Companies will not break up your payments and send two checks. If you have $1,000 a month coming in and you sell $500 of that, someone will have to receive the $1,000 check from the insurance company and then send you your $500. Whoever does that is servicing the payments.
If the Company you are dealing with insists on servicing the payments, you should be careful, if that company has financial struggles in the future, it could mean a delay in you receiving your payments. If that company later files bankruptcy, you could not only not receive the payments you sold; you could lose the part you didn’t sell.
At Strategic Capital we pay an independent third party to service the payments, so that your financial future is not tied to ours. The Independent company receives the payment and then sends Strategic Capital their $500 and you your $500. [Strategic Capital uses independent servicing so you are protected]You are completely protected.
What if you want to sell more payments in the future?
When the purchasing company is servicing the payments and you want to sell an additional portion of your settlement, they can refuse to make a payment to another factoring company. That makes them the only company that can purchase any payments you would like to sale in the future. That also means that they do not have to worry about competing with other companies.
Strategic Capital has actually had to go to court to force some of the companies you see on TV to let one of their clients sell more of their structure payments to us for a much higher price than those companies were offering.
There are some other danger areas that you need to be aware of.
One is the typical bait and switch. Unscrupulous companies will make an offer and then as you are finishing the contracts they will tell you they will not be able to pay you the amount they had agreed to. At this point they will feel that you are so deep into the process and need the payment so badly that you will agree to take less. If this happens to you, don’t argue or negotiate but run, because the company has shown you that they can’t be trusted.
Many companies will lowball you with their first offer. These guys shoot a low offer to see if you accept, and then when you get a higher offer they want you to trust them to beat the competition, but only if they HAVE TO. I’m not talking about a couple of thousand dollars here, because there is always a little room to negotiate. I’m talking about big increases in relation to what you were originally offered. A reputable company will always give you a fair offer up front.
Finally, only sell as much of you structure as you need to in order to get the amount of money you need. Beware of companies that push you to sell them more of your structure than you need to. Our experts will work with you to help find ways for you to minimize the amount of future payments you need to sell, not maximize them for our gain
Selling your structured settlement may be one of the two or three most significant financial decisions you make. Take the time to be sure you are dealing with an ethical company, because a successful transaction can mean an easier life for you and your family. An uninformed decision with the wrong company can lead to a significant financial loss.
Strategic Capital is a factoring company that operates with integrity and ethics that are not shared by many companies in our industry. We will answer all of your questions and see that you know what you are getting when you sell your structure. Take advantage of our knowledge and ethical treatment of all of our clients. Because with too many companies in this industry, every transaction is a case of SELLER BEWARE.
Give us a call and we will help. call us today