Understanding the Documents: Part 4 ~ When Should You Expect Your Money?

November 21, 2011 – It is important for sellers of structured settlement payment rights to fully understand the documents used in the transfer process which should clearly indicate a purchase price, as well as information related to how and when that amount is paid.  The amount received should be highlighted in both the transfer agreement between you and the structured settlement factoring company and in the disclosure statement required by your state’s specific transfer statute.  It is reasonable to expect the structured settlement factoring company to complete their internal review of the signed court order in a timely manner, such that the insurance company is quickly made aware of the sale.  Approval of the transfer in accordance with the law should result in quick payment of the purchase price.

Upon completing each step of the process, the judge will rule that selling your structured settlement annuity payment rights is indeed in your best interest.  It is then important to understand how the sales process is completed.  In other words, when can you expect to receive your money? Assuming the judge signed the court order approving the sale at the time of the hearing or very shortly thereafter, then you should expect to receive the funds within three business days.  Each day that passes where an order has been signed but you have not received the agreed amount to complete the sale results in a lower value for your payments. 

The reason to expect receipt of funds quickly is due to the work that has been ongoing prior to the court date between the structured settlement factoring company and insurance company.  Both parties have worked together to draft the language of the court order.  You should also be given an opportunity to review the court order prior to the hearing as well as an opportunity to ask questions of the transfer company’s counsel and of the transfer company directly.  By this point in the process you should have formed a good relationship with the company’s representative and should feel free to ask questions about anything. 

Ultimately, you stand the best chance of getting money quickly if working with a direct funder with access to their own capital.  If the purchaser is not a direct funder, then the purchaser is actually a broker.  Simply put, only two types of companies actively contract to buy structured settlement payments; those with their own money and those reliant upon an outside source to fund the transaction.  The best way to determine if there is a middleman involved is to ask 1) who will be show up in the order as the transferee, and  2) will the funder be funding the transaction with their own money?  THESE QUESTIONS MAY BE ASKED ANYTIME DURING THE SALES PROCESS.  If the purchaser does not provide straightforward, clear answers indicating that the funding company or an affiliated entity will be named in the court order, or if the representative will not disclose the source of funds, then it is a safe assumption that a middleman is funding the transaction and the company you are working with is not the end buyer.  Given the fact that the middleman is not putting their own capital into the deal and is therefore 100% reliant on the end buyer initiating the funding it will likely be very difficult for you to receive the funds within the expected three-day window.

November 21st, 2011

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