Selling Structured Settlement Payments?

If you are thinking about selling your structured settlement payments, this page is here to help you:

1. Save time
2. Contact the right people
3. Find the best deal or find a better option
   

Note: Sell structured settlement refers to selling and transferring structured settlement payment rights.

Quick Reference:

Structured Settlement Discount Rate = 6% to 12%

If you are selling structured settlement payments, you want the lowest effective discount rate you can negotiate. Example: If your discount rate is 7%, you get more money, or have to sell less of your payments, than if your discount rate is 8%, all other things being equal.

Notice How the Discount Rate Affects Your Money:

Companies may offer you discount rates in the 10% to 12% range or even higher, but you might not realize that discount rates in the 6% range may be possible. This 6% range is the effective discount rate which includes all costs/fees.

• selling monthly payments that are due closer in time
• selling monthly payments that are further out in time
• selling lump sum payment/s due closer in time
• selling lump sum payment/s further out in time
• selling a combination of the above options

Although getting a low discount rate is important, selecting which payments to sell is also important because you want to avoid financial problems in the future. Keep in mind that the best option for you might not have the lowest discount rate compared to the other options. Strive to get the lowest discount rate possible for the payments you select to sell.

If you know structured settlement deals are being done in the 6% discount rate range, you have:

1. A reference to help decide if you are getting a good quote/deal.
2. A discount rate target to shoot for and leverage during negotiations.

Thankfully there are advisors who understand discount rates very well and know how to negotiate to get more money.   (See the first part of Step 2 shown below.)

Note: Many factors are used to determine the effective discount rate such as: The amount and due date of the payments being sold, the life insurance company that issued the structured settlement annuity, guaranteed or life contingent payments, the source of the money used to pay the lump sum, legal/court costs, annuity company administrative fees, structured settlement factoring company profit margin and overhead costs, etc.   Payments that are due sooner will have a different discount rate than payments that are due later thus an average discount rate is typically used. For small transactions, the discount rate will likely be higher than the target 6% range because factors like legal/court costs (say $1,500) will be a larger part of the overall small transaction amount.

Sell my structured settlement?

4-Steps to find the best deal

1. Most Important:   First, determine if there is a better alternative than to sell your structured settlement payments. You may think that you have no other options but a better option may exist.
   
   
   • The fastest way to do this is to talk to a financial advisor experienced with structured settlements and who can help you explore other alternatives to raise money. Ideally a good advisor can help you preserve your money and provide information so that you can make the best decision for your situation.
     

     Listed below are advisors/groups who will help you with this step: (average time for this step is 30 minutes)

     • John Darer®, CLU ChFC MSSC RSP CLTC
       Location: Connecticut
       Phone: (888) 325-8640
       
       John is a financial advisor, structured settlement planner, and also has a structured settlement blog. He stays on top of what is going on in the structured settlement industry and frequently writes articles letting others know the good and bad currently going on in the industry.
       
       
     • Friends of Settlement Recipients
       (a charity/nonprofit corporation)
       Joe Tombs (director), RSP CFP® ARM CLU ChFC
       Location: Texas
       Phone: (806) 548-0568
       Cost: No Charge
       
       Joe is a financial advisor, structured settlement planner, and also a structured settlement lawyer. He knows the ins and outs of the court system and helps people manage and protect their resources. He founded the Friends of Settlement Recipients nonprofit to help people thinking about selling their structured settlement payments.
       
       
   • Also, you may want to consider contacting the lawyer or structured settlement broker from your initial structured settlement matter and see if they can provide you with advice or refer you to someone who can help.
     
     
   • If you want to do your own research, "Alternatives to Selling Your Structured Settlement Payments" can be a good starting point. Note:  Even if you do your own research you should seriously consider talking to an experienced advisor.
   
   
   • Some things to consider when comparing selling structured settlement payments to other alternatives:
     
     
     • The Consumer Financial Protection Bureau (CFPB), a U.S. government agency that makes sure people are treated fairly by banks, lenders, and other financial companies has issued a warning that: "You could receive much less cash than your settlement is worth." See their warning page which contains other tips and cautions about selling structured settlement payments.
       
       
     • Will receiving a lump sum of cash from selling your structured settlement payments affect: current and future government benefits (Medicaid, food stamps, etc.), past due taxes, back child support, back alimony, liens, bankruptcy, and foreclosure?
       Structured settlement payments may be protected from some creditors (people you owe money to) in some states. Will a lump sum payment be protected from creditors?
       
       
     • Also, read some stories of people who have sold their structured settlement payments and have regretted it. Reading these stories may motivate you to find another alternative rather than selling your structured settlement payments or may help you realize how to use the cash you receive from selling your structured settlement payments in a way that doesn't cause regret and hardship later. Do your best to make your situation have a positive outcome.
   • 
     (The important part of Step 1 is to understand that you may have better options available that you do not know about or have not thought of to help you with your situation. Talking with an advisor can help you determine your best option.)
     
     In Step 1, if you find a better option than to sell your structured settlement payments then pursue that option. If there are no better options then continue with step two.
   
   
   
   
2. You have gone over alternatives to selling your structured settlement payments in Step 1 and have decided that the best option is still to sell. You will need to find a reliable company who will pay you the most money for your structured settlement payments, treat you fairly and honestly, and move as quickly as possible to complete the process. It is possible that the insurance company that issued the structured settlement annuity will offer you the most money.
   
   
   • The fastest way to do this is to call someone who does this often and knows the ins and outs of getting the most money from selling structured settlement payments. They know which companies pay the most money and know how to negotiate to get the best results.
     

     Listed below are groups who will help you with this step: (average time for this step is 1 day)
     
     

     • The Negotiator Guys (contact: Gina Tedesco)
       Location: Florida
       Phone: (877) 216-9888
       Cost: Free review of your situation and/or current deal. If hired, fee is a small percentage of only the additional money negotiated. Fee is only due if the transfer is approved and funded.
       
       Note: Even if you have already signed a contract, they likely can get you more money, that is what they do. If you have not signed a contract, they will help put together the right deal for you selling the least amount of payments for the most money.
       
       
     • Friends of Settlement Recipients
       (a charity/nonprofit corporation)
       Joe Tombs (director), RSP CFP® ARM CLU ChFC
       Location: Texas
       Phone: (806) 548-0568
       Cost: No Charge
     
        Information needed to get a structured settlement quote:
     1. The amount and due date of payments that you want to sell. (Avoid selling more payments than you need to.)
     2. The insurance company that issued the structured settlement annuity.
     3. The state where you live.
     
     
     
   • If you are going to get structured settlement quotes yourself:
     1. Be sure to search the internet for reviews/complaints about the companies you are getting quotes from.
     2. Get as many quotes as possible to find the best deal. (Make sure the companies are all quoting the same payments to be sold so that an accurate comparison can be made.)
     3. Get multiple options quoted. Have a few different options (selling different payment combinations, different time frames, different amounts) quoted by each company so that you can find the best solution for your situation. Note: Selecting which payments to sell is very important because this can help prevent money problems in the future.
     4. Negotiate. (See negotiation tips below.)
     5. Once you find the best deal, have that company guarantee in writing the effective discount rate and the amount of money to be paid to you after all costs and fees are paid. You don't want the company to try to change the rate/amount 30 days into the selling process.
     6. Keep in mind this is an unregulated industry. The reps that provide quotes and work at factoring companies are not required to have licenses. There are no required rules or regulations in place to protect you.
     
     
     

     Getting Quotes?

        3 options that need to be explored:
     
     

     1. Get quotes from multiple structured settlement purchasing companies (factoring companies).
        
        
     2. Get quotes from banks (yes, a few banks will loan you money using your structured settlement as collateral).
        
        
     3. Get a quote from the life insurance company who issued the structured settlement annuity. (Not all life insurance companies will give you a quote but it does not hurt to ask.)

     
         See detailed information on each of these options below
     
     
     Get Quotes From:
     
     
     1. Structured Settlement Purchasing Companies (factoring companies):
        • Don't give out your personal information during the quoting process. (See " Warning 2" below.)
        • Ask the purchasing company to disclose the effective discount rate which includes all costs/fees
        
        To get started, below are four structured settlement purchasing companies (factoring companies) you should get quotes from:
        
        
        • J.G. Wentworth
          Location: Pennsylvania
          Phone: (855) 688-9678
          
          It is thought that J.G. Wentworth has the lowest cost of money which means they could provide you the best deal. You would need to negotiate and not just accept their initial offers. Some structured settlement purchasers buy structured settlement payments and then turn around and sell them to J.G. Wentworth. By dealing with J.G. Wentworth directly, you basically cut out the middle man and save money (depending on your negotiation skills). Note: J.G Wentworth, Peachtree Financial, and Stone Street Capital are all owned by the same company.
          
          
        • Rhonda Bentzen at Bentzen Financial
          Location: Tennessee
          Phone: (615) 599-2048
          
          
        • John Bulbrook at Bulbrook Drislane
          Location: Massachusetts
          Phone: (781) 254-8550
          
          Again, some structured settlement purchasers buy structured settlement payments and then turn around and sell them to John Bulbrook. By dealing with John directly, you basically cut out the middle man and save money (depending on your negotiation skills).
          
          
        • Bob Thompson at Annuity Transfers
          Location: Texas
          Phone: (888) 638-0900
          
          
        The National Association of Settlement Purchasers (NASP) has a directory of its members (structured settlement buyers) here.
        
        
        
     2. Banks:
        • Banks may offer you a better deal than structured settlement purchasers by providing a structured settlement loan. The overall outcome and process for a structured settlement loan is similar to selling a structured settlement to a purchasing company. The loan will need to get court approval.
        • Ask the bank to provide the loan's annual percentage rate (apr) that includes all costs and fees. This apr can be compared directly to the effective discount rate from structured settlement purchasing companies.
        
        Below are two banks that will provide a structured settlement loan using a structured settlement as collateral.
        
        
        • Midland States Bank
          MDS Group
          Location: Wisconsin
          Phone: (888) 818-4637
          Interest rate is around 8% but does not include attorney fees of up to $1,500 max. Past credit/credit score is not a factor.
          
          
        • Esquire Bank (update 4-4-2019 Esquire no longer offers structured settlement loans)
          Lee Ervin
          Location: New York
          Phone: (888) 407-3788
          Interest rate is fixed at 8.5% and includes attorney fees. Past credit/credit score is not a factor.
          
          
        *** See Structured Settlement Loan for more detailed information on each of these banks
        
        
        
     3. Insurance Company that issued the structured settlement annuity.
        
        Some life insurance companies that issue structured settlement annuities have hardship programs and may offer you more money than settlement purchasers (factoring companies).
        
        If you are receiving payments from a structured settlement annuity issued by:
        
        
        • Allstate Life Insurance Company, it has an Allstate Advanced Funding Exchange (AFEN) that may help you. Phone: (866) 739-2318. Discount rate has been reported to be 8%.
          
          
        • Berkshire Hathaway Life Insurance Company of Nebraska, it has a Hardship Exchange Program (HEP) that may be able to help you. Phone: (402) 916-3799. Discount rate has been reported to be 6.5%.
          
          
        • If you have a structured settlement annuity with another issuer/insurance company, call the insurance company and see if they can help. It doesn't hurt to ask.
        
        Note: Have the annuity issuer guarantee that there will be no tax consequences and that the transaction will not affect other payments.
        
        
     
     Warning 1: Beware of the "Grooming" process! If you are getting structured settlement quotes for yourself, payment buyers may seem like your best friend, give you gifts, and make it sound like they can solve your problems easily. You have to be cautious that they are not taking advantage of your circumstances. Also, if you have an emergency and feel you must have immediate cash, companies may offer you a money advance. Taking this money may attempt to lock you into selling your settlement to them even though they may not be the company who can offer you the best deal. (Before taking a money advance, read the fine print. Check if they are charging interest, if it locks you into a deal with them, etc.)
     
     Warning 2: If you are getting quotes for yourself, do not give out any personal information (name, phone number, etc.) during the quoting process. Some companies will call and mail you repeatedly trying to get you to sell your structured settlement payments and may even sell your information to other companies. To hide your phone number when calling to get quotes, search the internet for "how to block caller ID". After the quoting process, if you have selected a quote and thus a company to sell your payments to, that company will need your personal information.
     
     Negotiation tips:
     
     
     1. Tell the quote company that you are getting multiple quotes and that you are looking to find the best deal.
     2. Do not give out the quote amounts you have already received from other companies. If a company asks for the name or amount of a competitor's quote, tell them you cannot give out that information until you get all of the quotes in. If you reveal the highest quote (the largest money offer) at this point, the quoting company will just beat the highest quote by $500 instead of providing a blind quote which may be much higher than your highest quote.
     3. After you have gotten as many quotes as possible, call the company with the lowest quote amount (lowest money offer) and tell them the amount of the highest quote you have received. Then ask them by how much they can beat that quote. Continue this process over and over until all the companies will not go any higher.
     
     (The important part of Step 2 is to understand that the amount of money that companies will pay for all or part of your structured settlement payments may vary a large amount. Getting as many quotes as possible and negotiating to get the best deal will help you get the most money from your structured settlement payments. An experienced advisor can do this step for you, negotiation and all, and may get better results due to experience.)
     
     If you have decided on a company to sell your structured settlement payments to, continue to Step 3.
   
   
   
   
3. Before signing any documents: If you have found a company with a good reputation that will pay you the most money for your structured settlement payments in step 2, contact the company if you feel that everything is in order. The company should guide you through the selling process. Before signing any documents, have an independent financial advisor or attorney (someone not associated to the company buying your structured settlement payments) who has knowledge of structured settlement payment agreements look over the sales agreement/documents, and suggest any changes needed. They can help find terms that may not be in your best interest. For example, there may be terms that would limit your ability to sell other structured settlement payments to other companies in the future. (Rights of first refusal, broad arbitration provisions like: arbitration in a far away place or having to cover arbitration fees, unlimited security interests: security interest in all of your payments instead of only the payments being sold; etc.)
   
   
   • Listed below are advisors/groups who will help you with this step: (average time for this step is 1 day)
     
     
   • Friends of Settlement Recipients
     (a charity/nonprofit corporation)
     Joe Tombs (director), RSP CFP® ARM CLU ChFC
     Location: Texas
     Phone: (806) 548-0568
     Cost: No Charge
   
   
   
   
4. Getting your money: Later in the selling process, there will be a court hearing. If the court finds that the transfer complies with federal and state transfer laws, and the sale is in your best interests then the court will approve of your sale. Depending on the circumstances and who the annuity issuer is, you will receive the lump sum of money at some point within the next 30-45 days. Be careful after you receive the money because there are no protections against misusing the money and spending it on things other than what you sold the payments for.
   
   If things have gone well, you will be able to:
   1. Pay for what you needed the money for and
   2. Know that by finding the best deal or best option you have preserved/saved as much of your money in your structured settlement as possible.
   
   Warning: If you receive a large lump sum of money, be careful because people will ask you for money and you may be inclined to give money away or to charity.
   
   Note: There are two benefits to selling only as many payments as you need.
   1. You are not taking a loss on more payments than you need.
   2. After you pay for what you need, there's no money to be misused.

Selling Structured Settlement Payments

• You receive a lump sum of money in exchange for your future payments.
• You are charged a discount rate (like an interest rate). The discount rate is an annual rate (charged each year) and is used to discount your future payments to arrive at a present day lump sum value. It is comparable to the interest rate that you would be charged on the lump sum of money if it were a loan.
• Basically, you get less money now rather than receiving your full payments in the future.

FAQ - Frequently asked questions:

• Most structured settlement payments can be sold.
• Selling payments from a workers' compensation structured settlement or a minor's structured settlement may be difficult or not possible. (Concerning minors, if the case was settled while the payee was a minor, but the payee is an adult now, then there is no problem.)
• If you depend on your structured settlement payments for your daily needs, like housing, food, healthcare, etc., then it is not likely that you can successfully sell your payments.

Dos and Don'ts

Selling Structured Settlement Payments - A Summary of the Process:

1. Seller needs money, seller sees advertisement, or seller is contacted by a structured settlement purchaser who wants to buy structured settlement payments.
   
   
2. Seller considers selling their structured settlement payments.
   
   
3. Seller gets quotes from companies.
   
   
4. Seller considers quotes and decides if selling is their best option.
   
   
5. Seller selects quote/company and contacts company.
   
   
6. Company gets information from seller and sends seller a disclosure, statement summarizing the transaction, and the purchase contract.
   
   
7. In most states, seller will be advised to consult with an IPA (Independent Professional Advisor). In some states, the seller must hire an IPA. Your IPA can be the person you use in Step 3 above. An IPA is an attorney, certified public accountant, actuary or other licensed professional adviser that gives the seller professional advice regarding the transfer.
   
   
8. If seller approves/signs disclosures and contracts, an attorney representing the structured settlement purchasing company will submit a petition to the local court (usually in the county where seller lives), and a hearing is scheduled.
   
   
9. Purchasing company is required to provide the annuity company and other interested parties notice of the court hearing. "Interested parties" usually includes any beneficiary irrevocably designated under the annuity to receive payments following the payee's death, the annuity issuer, the structured settlement obligor (structured settlement owner, typically an assignment company), and any other party to such structured settlement that has continuing rights or obligations to receive or make payments under such structured settlement.
   
   
10. At the hearing, seller may have to appear. Typically, it is a good idea to appear in court so the judge can ask you questions. If someone from the factoring company tells you not to go to court, this can be a red flag - make sure to ask why. At the hearing, the court will decide if the state and federal transfer laws have been complied with, and if selling is in the seller's best interest taking into account the welfare and support of any dependents. If court approves, court will sign an order transferring the payments to the purchasing company or its investor (usually called an "assignee" in the order).
    
    
11. In many cases the annuity issuer and owner will insist on a "Stipulation" agreement between them, the seller, and the factoring company. This is not usually filed in court. In this agreement, the annuity issuer and obligor will require the seller and purchasing company to make certain statements concerning the transfer, and promise to release and indemnify them if anything goes wrong. Nearly all annuity issuers and obligors also charge a fee, paid by the purchasing company. These administrative fees range from $750 to over $3,000, depending on the annuity company and the type of transfer. This is a very significant agreement the seller will need to sign, and should not be taken lightly.
    
    
12. Order and signed stipulation are sent to insurance company for acknowledgement.
    
    
13. Seller receives money from selling structured settlement payments.
    
    

Who is involved in selling structured settlement payments?

• Seller: the person who has a structured settlement and wants to get money from selling their future structured settlement payments. They are also known as the structured settlement annuitant, the payee (the person being paid) and sometimes the claimant.
  
  
• Structured Settlement Purchaser - Factoring Company: A company that will buy the right to receive your future structured settlement annuity payments for a lump sum of money. Some act as a broker/middleman between a structured settlement payment seller and an investor. They exchange a lump sum of money (from an investor to the seller) for structured settlement payment rights (from the seller to the investor).
  
  
• Structured Settlement Purchaser - Quote Provider: Person who will provide a quote containing how much money the seller will receive from selling their future payments.
  
  
• Structured Settlement Purchaser - Lawyer: Prepares documents and files documents with local court. Schedules and attends hearing. Note: The lawyer represents the settlement purchaser not the seller. Seller may choose to have a lawyer as well, or other independent professional advisor (IPA).
  
  
• Investor: Provides capital (the money used to pay the lump sum of cash to the seller) to the structured settlement purchasing company. In return, the investor's goal is to get a higher than average rate of return (compared to a standard annuity) on their money at a risk level they deem acceptable.
  
  
• Advisor/IPA (independent professional adviser): seller may be required to receive advice from an independent professional advisor (IPA). An IPA can be an attorney, certified public accountant, actuary, or other licensed professional adviser that advises the seller regarding the structured settlement and/or transfer of structured settlement payment rights.
  
  
• Court/judge: has to decide if the proposed transfer (sales transaction) complies with federal and state transfer laws and is in the best interest of the seller taking into account the welfare and support of any dependents.
  
  
• Servicing Company: Needed if a partial amount of the structured settlement payments are sold and the insurance company who issued the structured settlement annuity will not divide the payment check. The servicing company receives the whole payment amount from the insurance company and splits the payment up so that everyone who is due money is paid their share in return for a fee.
  
  
• Life Insurance Company: The issuer of the structured settlement annuity. They receive notice and acknowledgement of structured settlement payments rights transfer. They send payments to the payee/annuitant (structured settlement payments rights holder).
  
  
• Term Life Insurance Company (if life contingent payments are sold): A prepaid term life insurance policy will sometimes be purchased if life contingent payments are being sold. This insurance is used to protect the structured settlement payments rights holder against financial loss if the seller dies before the end of the assigned payment term.
  
  
• Structured Settlement Annuity Owner: Typically, an assignment company that is usually an affiliate of the life insurance company from which the structured settlement annuity is purchased. Also called the obligor.
  
  
• Structured Settlement Annuity Issuer: The life insurance company that sells the structured settlement annuity. See "Life Insurance Company" above.

Behind the Scenes

• Court documents are filed before structured settlement payments are sold thus companies may try to poach a seller from another factoring company by calling the seller and potentially offering a better deal.
  
  
• Court documents are filed after payments are sold thus a company may try to talk the seller into selling more payments in the future.
  
  
• In some cases, court documents are filed when the initial structured settlement occurs thus companies may contact the structured settlement recipient trying to get them to start selling payments.

If you are selling your structured settlement payments, the 4-step process above is here to get you going in the right direction:

1. Save time
2. Contact the right people
3. Find the best deal or find a better option

If all goes well, you will be able to pay for what you needed the money for and know that you have preserved/saved as much of your money in your structured settlement as possible.