STRUCTURED SETTLEMENTS

Selling your structured settlement can be relatively painless if you are informed and knowledgeable about your financial options. MyNoteMarket has collected information about the structured settlement process and resources to help you research your options.

Use the Education section below to quickly understand:

• How to sell a structured settlement
• How structured settlements are priced
• Due Diligence - What questions to ask.
• Terminology

Once you have gone through the Education section, use the additional Resources to research potential buyers, review current news and blogs, and get links to tax and legal sites.

Education

How To Sell a Structured Settlement

1) First you should determine your current and future cash needs and financial condition. It is recommended that you consult a financial advisor or lawyer. Remember, you can sell all or just a portion of your future cash payments.

2) Contact your payment provider, usually an insurance company, to determine the amount, number payments remaining , and terms of your structured settlement. It is a good idea to get all contract information from your provider. You will need this information to give to the potential buyer.

*Ask your payment provider if they have worked with structured settlement buyers, they might disclose a few potential buyers to begin your search.

3) Determine what amount you would like to sell. You will receive more money for payments that will be received sooner than payments in the distant future. Please see "How Structured Settlements are Priced" to understand cash flow pricing and discounting.

4) Search for a buyer of structured settlements. It is very important to feel comfortable with potential a buyer. Please see "Due Diligence" for tips on selecting a buyer.

There are a number of ways to find a potential buyer:

• talk to your financial advisor or lawyer,
• use this site to identify potential buyers,
• search the Internet,
• talk to friends and family who have sold a structured settlement.

5) Get multiples quotes for your structured settlement. While the highest quote may be attractive, you should consider all the factors together. These factors include: reputation, experience, your comfort level, etc.

6) Once you have selected a buyer, you will have to sign a contract with the buyer. This contract should outline the terms and conditions of the structured settlement payment. It is generally called a Disclosure and Transfer Agreement.

*Tip: It is strongly advised that you have your lawyer review this contract before you sign it.

7) Now the information gathering process will begin. The potential buyer will request specific information about your structured settlement. It is recommended that you have as much information collected before you begin this process. This process can last between 2 to 14 days.

*Tip: Request to see the buyer's privacy policy.

Information requests can include:

• Settlement Agreement/Court Judgment/Release
• Annuity policy/contract - from the insurance company or payment provider
• Payment verification - payment check stub or bank statement.
• Your personal information including driver's license
• Copy of marriage license or divorce decree (if applicable)
• Bankruptcy discharge documents (if applicable)
• Your lawyer's information

8) Once the buyer has all the required information, they will begin an underwriting process. This process usually lasts between a month to several months, depending on statutory requirements, the company, and complexity of your structured settlement.

*Tip: Ask the buyer up front about the process and time to completion. Be cautious of very short process times.

9) When the underwriting is complete, the buyer will submit the settlement to the court for approval. A judge will review the settlement and determine if it is in the your best interest to sell the settlement. The buyer should cover all costs associated with the approval process. While you are under no obligation to appear in court, you should consult an advisor about your unique situation.

*Tip: Ask the buyer up front about all costs and who is responsible for paying them.

10) If the court grants your settlement request, the buyer will transfer the cash to you.

Congratulations your sold your structured settlement!

*Please note: these are general guidelines, all situations are unique and vary by state and company.

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How Structured Settlements are Priced

Structured settlements are priced by discounting future payments by a discount rate. This discount rate can vary widely from 9% to 18% depending on the buyer. The lower the discount rate, the more you should receive for your structured settlement. Also, the further out a payment is, the more it will be discounted. Meaning you will receive less cash now as the time to receive future payments increases.

Check out these links for more information:

• Structure Settlement Pricing - Wikipedia
• Structure Settlement Factoring - Wikipedia

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Due Diligence

There are numerous potential buyers for your structured settlement, it is hard to choose the right one. But with a little due diligence(research), you can select several that are reputable and right for you. One important point you should be aware is whether you are dealing with a principal or broker. If you a dealing with a principal, you may get better pricing due to the absence of the broker fee. Most principals use brokers to bring them business but there is a definite cost associated with this added layer of service. But brokers can be valuable in finding multiple buyers and could potentially get better pricing even after factoring in their fee.

Here is a guide to help you choose the right buyer:

1. How long have they been in business?
2. Is their contact and business information verifiable?
3. Are they bonded or insured?
4. What is their underwriting criteria?
5. How is their Better Business Bureau rating?
6. Do they handle your type of structured settlement?
7. How many structured settlement purchases do they do a year?
8. Are they familiar with your local courts and state practices?
9. How will they price your structured settlement?
10. What discount rate did they use in the quote?
11. Can they provide a time table for the process?
12. Do they use multiple financing sources for your quote?
13. Are they a principal or a broker?
14. Are they associated or member of a larger corporation?
15. Do they have a privacy policy?
16. Are they members of trade and professional organizations?
17. Are they professional in all communications and business presence?

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Terminology

Here is some basic terminology for structured settlements:

Annuity - A financial product usually sold by insurance companies or other financial institutions to provide financial planning and/or savings. In a structured settlement, an annuity is used to make payments over a specific period of time. Annuities are regulated by several professional and governmental organizations. For more info see: Annuity - Wikipedia

Best Interest standard- The standard applicable to transfers of structured settlement payment rights based on judicial findings regarding the payee and his dependents. For more info see: Structured Settlement Factoring Transaction- Wikipedia

Discount Rate - Is the rate at which future payments are discounted to calculate a present value in terms of today's dollars. For more info see: Structured Settlement Factoring Transaction- Wikipedia

Discounted Present Value - Is the amount in today's dollars of future cash flow payments. The amount is calculated by using the Discount Rate to estimate a present value amount. The lower the Discount Rate, the more you will receive for future payments. For more info see: Structured Settlement Factoring Transaction- Wikipedia

Factoring Company - A company that is engaged in purchasing financial assets or obligations, usually at a discount. Buyers of structured settlements are often referred to as factoring companies.

Gross Advance Amount - The amount paid to the payee as consideration for a transfer of structured settlement payment rights before expenses such as; transfer expenses or other transaction expenses.

Model State Structured Settlement Protection Act - The model state law enacted by NCOIL, the National Conference of Insurance Legislators that provides state guidelines regulating the structured settlement transfer process. For more info see: Copy of the Model State Structured Settlement Protection Act

Net Advance Amount or Lump Sum - The gross advance amount less the all actual and estimated transfer expenses.

Periodic Payments - Payments made under a structured settlement agreement, including any scheduled future lump sum payments.

Qualified Assignment Agreement - An agreement providing for a qualified assignment within the meaning of section 130 of the Internal Revenue Code of 1986.

Settled Claim - The original personal injury, workers' compensation, or sickness claim resolved by a structured settlement.

Structured Settlement - An arrangement for periodic payments to settle damages established by settlement, judgment or decree for the resolution of a settled claim.

Structured Settlement Agreement - An agreement, judgment, decree, stipulation or release embodying the terms of a structured settlement, including the rights of the payee to receive periodic payments.

Structured Settlement Obligor - With respect to any structured settlement, the party that has the continuing obligation to provide periodic payments to the payee under a structured settlement agreement or a qualified assignment agreement.

Structured Settlement Payment Rights - Rights to receive periodic payments under a structured settlement, whether from the settlement obligor or the annuity issuer, where the payee is domiciled.

Transfer Agreement - The agreement providing for transfer of structured settlement payment rights from a payee to a transferee.

Transferee - The party acquiring or proposing to acquire structured settlement payment rights through a transfer.

*Reference/Source: Several terminology definitions are from the Model State Structured Settlement Protection Act.

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