One of the most common questions we have received over the years of buying structured settlement payments is “what is the process to sell structured settlement payments”. The structured settlement process is best understood by looking into the statute that mandates the transfer of structured settlement payments along with understanding the following requirements.
What is the statute that determines the structured settlement process?
In 2002, a statute went into effect that forever changed for the better the selling structured settlement process to a third-party. The statute requires thorough disclosure of the key aspects of the transfer of the payments. It also requires that a judge review and approve the transaction which ensures that the transaction is in your best interest when you sell the payments. This process ensures that you are well-informed and that you receiving a reasonable deal. While the structured settlement statute is set up to protect the consumer, there are several key parts of the structured settlement process you should understand before moving forward.
What is the structured settlement process?
The first part of the process to sell structured settlement payments is to receive a disclosure statement from us after agreeing to a price. A disclosure statement is required, by the state statute, to be sent to you prior to executing a contract. The statement shows you the terms of the transaction. The disclosure will detail the payments being sold, the amount you will receive, the costs being charges along with a recommendation to seek professional advise. After receiving the disclosure, there is a mandated waiting period prior to being able to sign a contract. The waiting period can be as short as 3 days to as long as 10 days, depending on the state that you reside. Once you have received the disclosure and waited the necessary period of time, you will be eligible to sign a contract or as we call it, a transfer agreement.
After the necessary waiting period, you are eligible to sign a transfer agreement. The agreement lays out the terms of the transaction along with additional exhibits that allow the transaction to commence. In our next blog we will go into more detail about the exhibits, however generally speaking each exhibit works to ensure a smooth transaction. The disclosure and transfer agreement are necessary parts of the transaction which are executed by you, but in order to complete the structured settlement process you must also provide certain proof of the annuity and settlement.
What documents must I provide to complete the structured settlement process?
There are a few documents that you must provide to us which evidences the annuity and settlement. When you settled your lawsuit you would have executed a document called a settlement and release agreement. This document essentially sets forth that the lawsuit was settled and that a release was provided to the other party in exchange for compensation. While this is the most common name for the document, it way also be called “minors compromise” or “release and settlement” or possibly “settlement agreement”. Along with the settlement and release agreement, in order to complete the selling structured settlement process you must also provide proof of the annuity. When the case is settled, the insurance company typically buys an annuity to make the payments to you. The annuity is evidenced in the form of an annuity policy. Many times the annuity policy has been misplaced over the years, so as a replacement for the annuity policy the annuity company will provide to you a document called a “benefits letter”. The benefits letter is typically a one page letter describing your payments that are still due to you, the company that is paying you, the owner of the policy and finally the policy number. This letter can be requested from the annuity company via a written request. When you are thinking about selling structured settlement payments, I would suggest that you go ahead and request the letter as it will speed up the process to sell your structured settlement when you decide to move forward. There may be some additional documents necessary to provide to us depending on your particular situation. Speak with your Mainstreet Funding structured settlement team member for more specifics.
What else is required in the selling structured settlement process?
The next part of the process, based upon the state statute, is to receive approval from a judge to transfer the payments. This part of the process ensures that you receive oversight of the transaction. The judge reviews the transaction to ensure that the transaction is indeed in your best interest. Although this part of the process can seem slow, depending on how busy the court is at the time it is submitted to the court, it is a very important part of the process. Since this is probably the first and only time that you sell your payments, it is good to have a third-party review the transaction on your behalf. Generally speaking, you will need to go in front of the judge so that he/she can ask you about the transaction and ensure you know the aspects of the transaction including the amount being sold and the amount you will receive. Sometimes the judge will ensure that the money is being used in a way that helps your situation. The judge would probably not approve a transaction in which the money was being used to buy a high-priced luxury car as example, however using the money now to pay bills, mortgage, reasonable car, home and school are all good reasons to sell payments.
It is important to understand how the selling structured settlement process works along with what documents are required to complete your file as it gives you a comfort level in selling what may be one of your biggest assets. Learn more about the process by contacting one of our friendly and knowledgeable team members here at Mainstreet Funding, who is here to answer all your questions and ensure you are comfortable in the process. Call us today at 1-877-919-8003.