It’s time to consider selling your annuity payments. While the decision may not be in your best financial interest there may be a hardship in your life. When there’s a financial emergency in your life it’s important to review the checklist of items to review before entering into a transaction to transfer your future payments.

Table of contents

1. What is the process for selling a structured settlement?
2. Reasons to not sell your settlement payments in 2021
3. Common reasons why people sell their settlement payments
4. Things you will need for the transfer process
5. What are the Top 10 names in the secondary structured settlement industry
6. What to do next

What is the process for selling a structured settlement?

The process for selling a structured settlement payment that you’re receiving from an insurance company takes up to 120 days. Selling your settlement payments transfers the payment streams from you to the new buyer or recipient who is taking over the rights to receive your payments. The process has to be court approved with a judges stamp of approval. Transfers take place in all 50 states, Washington D.C. & Puerto Rico (Puerto Rico transfers prior to covid-19 were done off the island) with different structure settlement protection acts and laws in your state.

Reasons to not sell your settlement payments in 2021

Holding onto your future payments has many financial benefits as you will not lose money to the discount rate, secondary market companies fees, and it’s a reliable stream of income. A sale of your settlement payment is not a decision you should take lately. Structured settlements are established as a result of a negotiated compromise. A personal injury attorney was hired with your best interest in mind and got you a settlement as a result. The settlement payments are funded in most cases with structured settlement annuities.

For additional information you can read IRC 130(d) or view the image below with details about qualified funding asset.

Reasons to not sell your settlement payments in 2021

There are no great reasons to sell your settlement payment rights. When the law firm settled the personal injury claim it was done with future life expenditures in mind to make up for the damage that resulted in the lawsuit being filed. 2021 is expected to be a much better year than 2020 with the global pandemic and COVID-19 behind us in 2021. There are stimulus checks being issued, increased unemployment, and financial options to help your bridge the gap instead of having to enroll in a program to sell or transfer your settlement payments. You have almost every reason in the book to not sell.

Common reasons why people sell their settlement payments

Is the reason you’re selling your payments because you have a financial hardship? If so there are alternative solutions to raise capital and pay bills when times are tough but unexpected expenses do arise and there are a few ways to raise large lump sums of money outside of liquidating your structure settlement payments. Clients who enter into a transaction have to show cause for needing to liquidate their settlement payments, those acceptable reasons are: raising funds for college, paying off child support, paying back taxes, purchasing a home, or paying for needed medical procedures. Outside of those main reasons it will be difficult to get the judges approval for a transaction.

Knowing the law and the tax code is important when entering into such a large financial transaction. You should review tax codes, consult with a lawyer, IPA, and a CFA to discuss the benefits and drawbacks of entering into such a transaction.

Things you will need for the transfer process

• A photo id from the state you currently reside in
• Your settlement agreement
• Contact details for the lawyer who settled your case
• A valid reason of hardship
• A time to meet with the notary to sign documents

What are the Top 10 names in the secondary structured settlement industry

The industry is filled with well known names that you may have seen on television. So what is the biggest name in the industry? J.G. Wentworth is the largest company in the structure settlement industry. In 2020 they did over 50% of all deals in the secondary market through all of their brands.

1. J.G. Wentworth
2. Peachtree Settlement Funding
3. DRB Capital
4. Novation Settlements
5. CBC Settlement Funding
6. Stone Street Capital
7. Olive Branch Funding
8. Seneca Funding
9. Strategic Capital
10. RSL Funding

What to do next

What is the final step to enter into a settlement transfer? If there’s an absolute need to sell and you have to raise capital then do your research and find a company that has 0 credible complaints and negative reviews online. Ask for referrals from other happy clients that have done a deal with their company, and prepare to wait up to 4 months as courts in 2021 will be backed up due to the delays arisen from COVID-19 court closures.