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| FAQ Selling Structured Settlement |
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THE 10 MOST FREQUENTLY ASKED QUESTIONS THINGS YOU DEFINITELY WILL
WANT TO KNOW WHY SHOULD I SELL MY INCOME STREAM? If you are happy with receiving your money in
payments, then by all means, do not sell. Many people are
quite content receiving monthly, quarterly or annual payments
over a number of years. But, what if you have a
need for immediate cash?
Often, people find themselves in situations where
a lump sum of cash is required. These range from needing
to pay taxes and settle debts, to getting a divorce or experiencing
an illness. HOW DO INSURANCE COMPANIES AND GOVERNMENT AGENCIES FEEL ABOUT THIS? Well, in a word, THEY HATE IT! Insurance companies do not want you to know that you can cash out your payments. Why? Consider what happens when an insurance company offers you a structured settlement, paying what seems like a large amount of money, say $100,000 dollars over a 10 year period. Do they actually pay $100,000? Of course not. Common sense tells you that. It is in their best interest to pay out AS LITTLE AS THEY POSSIBLY CAN. So, they buy an annuity for a lesser amount, (A GREAT DEAL LESSER), and then let that annuity earn sufficient interest to make your payments over the next 20 years. They would never want you to know that they actually paid only a fraction of what it looked like they paid. It's a money game, and as long as you are in the dark, they come out on top. The same is true of lottery winnings. When you win a million dollars in the lottery, you don't really get a million dollars! You get annual payments for 20 years. When you break it down over such a long time, a million dollars is really only $50,000 per year, less taxes of course. How much will that $50K buy in 10 years? Certainly not what it will buy today! So, why don't they just give you the money? Again, it's because they are investing a much smaller amount, and letting it build interest to make those $50K payments every year. In short, they are making money on what should be your money, while you have to wait! Now, consider for a moment what you would do if you had a lump sum of cash. How would you invest it? Do you think that you could earn as much, if not more, interest for yourself? Wouldn't you like to be the one making the decisions about your money, and reaping the rewards? IS SELLING MY FUTURE PAYMENTS LEGAL? ABSOLUTELY! Not only is it completely legal, but corporate America and wealthy individuals have been buying and selling contracts & income streams to improve their cash flow and meet their financial obligations for years. However, this knowledge has been a well-kept secret from the general public. The truth is there are funding sources across the country who are buying these types of paper right now. Our job is to know who those funding sources are, to know who pays the most for each type of income stream, and to secure the highest purchase price for our client. It's a job we do well! WHY DIDN'T MY LAWYER TELL ME I COULD DO THIS? Most likely, the reason your attorney did not give you this option is because he probably doesn't know about it! Attorneys are trained to look out for the best interests of their clients, but they are not trained in alternative finance or secondary markets. The vast majority of attorneys, as well as the public at large, are completely in the dark about these options. This is also true of CPA's, financial planners, and real estate professionals. They believe there are no options, and no one has told them otherwise. However, those few who do know about these options are jumping at the chance to offer these services to their clients! HOW MUCH WILL IT COST ME? There are no out-of-pocket expenses incurred by a client when selling your income stream. All up-front costs, expenses and legal fees are paid directly by the funding source. HOW LONG DOES IT TAKE? The process is pretty straight forward. Once the necessary documents are in, the process usually takes about 6 - 8 weeks for funding, sometimes even less. Upon closing the deal, the funding source will send you your money, either in a check by overnight courier, or by wiring the $$$ directly into your account, as you instruct. IS THIS A LOAN? DO I HAVE TO PAY THIS BACK? No, this is not a loan. There is no money to pay back and no debt incurred. When you sell your future payments, you receive cash to use as you choose. There are absolutely no strings attached. WHAT IF THE PAYOR DEFAULTS? Once a funding source purchases your payments, they assume all future risk. Should the payor go bankrupt or otherwise default on the debt, the funding source takes the loss. No one can ever come back on you. HOW DO I PICK THE BEST BROKER? One important question to ask a broker is how
many underwriters they are going to present your deal to.
This is a critical issue because many brokers
have entered into exclusive contracts with the funders themselves.
Funders depend on brokers to bring them their deals - these
brokers are their life blood. Therefore, it is in the funders
best interest to get the broker to sign a contract guarenteeing
them exclusivity. They do this by offering incentives. Many
offer co-op advertising dollars to the broker, or provide them
with prepackaged media. Others offer higher broker commissions,
or preferential broker status, etc. WHAT ABOUT CERTIFICATION? This is an important question
to ask. As with any industry that experiences
a period of growth, there are always those few individuals who
choose to operate in an unethical manner, and diversified cash
flow is no exception. Especially when the industry is new,
it can be that much harder to know who you are dealing with. This
is why certification is extremely important. The diversified
cash flow industry is self-regulating and has developed training
standards, testing for certification, and continuing education
requirements that are nation-wide. Still, there are a lot
of so-called "brokers" who are not certified at all. These
individuals may only represent one or two funding companies, which
eliminates competitive bidding. And, because they are unregulated,
your recourse is limited. Therefore, always
be sure to ask about certification. If
necessary, contact the American
Cash Flow Association, located in Orlando, FL., to verify
the status of a particular broker. Or, visit their web site
at www.acfa-cashflow.org. |