You are doing your research to pick who can buy structured settlements from you and that is smart – it makes you an informed consumer. Go you! Now, allow us to point out a few crazy statements and ploys, some that you may have already encountered, but all that you should be wary of as you decide whether to sell your structured settlement payments.
This is the main tagline of one of the biggest companies to buy structured settlements. But it is a ploy, designed to appeal to your sense of control. The truth is that your settlement money is already your money, it is just being managed for you and delivered in a way to promote your continued financial security. Don’t be fooled into selling your payments only because you think it gives you some extra control. Sell your payments if you have a real financial need, not because an advertising slogan convinced you.
Receiving your structured settlement originally probably helped ease the financial burden of a physically or emotionally damaging event, as it should have. And selling your payments may do the same if times have turned tough. But selling your payments should not be an emotional decision, like the recent Opera commercials, of “It’s my money” and “I have a structured settlement and I need cash now” published by one company make it seem. These commercials are well done and fun, to be sure. Advertising money well spent. But they are an attempt to use emotion and psychology to influence you. Sure, you have a structured settlement but need cash now – is that reason to sing? The commercials say nothing of the costs, considerations, customer care or anything else about the company – they just appeal to your basic emotions and make you feel good about selling your settlement. Of course, if you need to sell your settlement then you should feel good about it, but a singing fat man in horns shouldn’t be the reason that you decide to sell.
One important consideration when someone wants to buy structured settlements from you is the time value of money. That is, the idea that your future money is worth less than money today. This is part of the discount rate calculation and part of the reason that your sale will net you less cash than you would get through those future payments. Yet, some companies try to twist this around and make it a reason to sell.
Liberty Settlement Funding, on their website, wrote that inflation was a reason to sell payments. They asserted that your money loses value over time and that having the money in hand now is better than having it in the future. But they don’t go on to say how much less you will receive for later payments because of that time value decrease. Sure, the money is worth more now, but you will get less of it exactly for that reason and you lose more than you would lose from simple inflation. The presentation of the information is misleading and unethical.
The fact is that yes, according to structured settlement watchdog and seller advocate John Darer, money in hand today does have more purchasing power. But that is not a reason to sell your settlement. You should sell your settlement only if you have an immediate need.
Some websites and companies neglect to tell you that you can sell just part of your payments; they may encourage you to sell all of your payments, even if you don’t need to, just to get your money. Be sure that the company that you choose is not only honest, but encourages you to sell only what you need to.
In an effort to get you to sell more payments some companies may lead you to believe that you can only sell your payments once, so you should sell them all now. This is not true. You may sell payments as many times as you need to.
Structured settlements law is designed to give you rights, and the judicial review is designed to help protect you, yes. But you can’t count on it to do the entire job for you. Judges will deny if they think that you have a poor reason or that the fee is too high, but they might have a different idea of what is acceptable than you would if you researched it thoroughly.
Some companies who want to buy structured settlements from you will tell you that you should sell your settlement if you believe that you can invest it in a way that will earn more money. However, this is dangerous ground to be treading. No investment is a sure thing; no business effort a guarantee. If you pull your money out of a structure by selling payments and put that money into an investment you could lose everything, including the security of settlement income.
At Strategic Capital we work with you to inform you, listen to you, and help provide you with the information that you need to make the best decision for your family and your future.