Individuals receiving payments over time from a personal injury claim are fortunate in that they have a financial asset to lean on when life happens and immediate liquidity is needed. Assigning future payments in exchange for an immediate lump sum of cash is one way of raising the needed funds. The process for doing so can be complicated but often follows a certain path.
1. Figure out what your financial need is.
This is the first and by far most important step. Identifying the specific dollar amount that you need to raise will guide you in your decision of which future payments to assign, as well as how much of each payment. It’s tempting to enter into large transactions to get the most amount of money possible, but oftentimes it’s more prudent to address specific needs, such as bills or repairs, instead of trying to obtain a big check.
2. Collect information about your annuity
Once the need has been determined, the next step is to collect information about your structured settlement annuity payments. A benefits letter from the issuer of the annuity should give you a comprehensive overview of the payments remaining in the policy less any prior assignments. This is important information to have because the same payment can’t be assigned twice. If possible, it’s also a good idea to retrieve information and documentation about prior assignments, in case the benefits letter in your possession has omitted prior transfers or has a mistake.
3. Time till closing
The time between completing all paperwork required for transfer of structured settlement payment rights and actually obtaining your funding is usually between 4 and 6 weeks. This is because the paperwork first needs to be filed with the relevant court and a hearing date must be assigned so that the judge can determine whether the transfer is in your best interest. In most states, there is also a 20 day “notice period” before which a hearing date cannot be scheduled, as the interested parties need time to respond to the transfer application.
4. Funding
In order to be in compliance with the federal and statutes governing the transfer of structured settlement payment rights, the factoring company that you work with must obtain a court order approving the transfer. This is obtained once a hearing has been conducted and the court finds that the transfer is in your best interest.
After the above requirements have been met, the factoring company will remit the agreed upon funding amount to you, usually either by check or bank account transfer depending upon your preference.
If you are considering raising cash by selling life contingent payments, reach out to the team at Life Contingent Capital. We are specialists in the pricing of life contingent payments and make offers that many of our competitors can’t match. Call (833) 760-4006 for a free consultation and to hear your options, or visit us online at LCpayments.com
Life Contingent Capital and its affiliates are purchasers of assets. Nothing written on this website or blog should be construed as financial, tax, or legal advice; you should obtain independent financial, tax, and legal advice in connection with any transfer of structured settlement payment rights.
