January 5, 2010
Using Your Structured Settlement for Debt Relief
It’s the time of year when people start making New Year’s Resolutions. According to the USA.gov website, the top two resolutions American’s are making is losing weight and managing debt. While we’re sorry to say your structured settlement can’t help your belt size, it can under the right circumstances be a tool for managing debt.
When to Sell Your Settlement
If you’re planning on going on a holiday shopping spree and need a little extra cash to fill the stockings, your structured settlement is not a good place to look for dollars. However if you have gotten yourself into a situation where you are drowning in debt at very high rates, it may make financial sense to use part of your settlement to clear the books.
According to a Nilson Report, the average credit card debt in households that had a credit card was $10,679 in 2008. According to the debt calculator at Banrate.com, if you carry that amount of debt at 13% interest (which is relatively low), making minimum payments of $221 per month, it will take 28 years to pay off the credit card and you will pay more than $11,000 in interest. If you have $20,000 in debt and an interest rate of 18% your minimum payments will be around $497 per month it would take 34 years to pay off this debt and you would pay more than $29,000 in interest.
Selling your settlement under some of these scenarios can save you money and ensure you keep a solid credit rating, however it is critical to note that if you are going to sell all or part of your settlement to pay off credit card debt, you must have a plan to keep that debt from creeping back up on you or it will all have been for nothing. This requires making a future budget and possibly consulting with a financial counselor to figure out how to keep out of such a financial mess in the future.
All Debt is Not Considered Equal
You may have heard of “good” debt and “bad” debt. While most people would prefer to carry no debt at all, there are some types which shouldn’t be a major cause for worry. Student debt is one example. This debt usually has a relatively low interest rate and carries some provision to postpone payments occasionally if you are unemployed or have suffered some sort of financial hardship. Selling a structured settlement to pay student loans probably doesn’t make sense.
Another example of “good debt” would be your mortgage. Very few people buy their home outright and selling your structured settlement to pay off manageable mortgage payments is probably not worth it. The exception to this rule is if you are one of the thousands of Americans who entered into a shifting mortgage that now has payments that have become unmanageable or if you are facing foreclosure. In these situations, it is definitely worth it to sit down and evaluate whether selling your settlement would save your house. It is important in this scenario to make sure after selling your settlement you would be able to make your monthly mortgage payments, or you would be selling it for nothing.
This can all be very complicated for consumers. If you have any questions about selling a settlement or annuity, we would be happy to talk to you. Sovereign Funding Group is a no pressure company that can help you make an informed decision when selling all or part of your structured settlement. Call us today at (877) 836-4661.
Posted by dspringer at 10:05 AM
Happy Holidays from Sovereign Funding Group
We would like to wish all of our clients, colleagues and partners
Happy Holidays and a Joyous and Prosperous New Year!
Thank you for Making 2009 wonderful and may the new decade bring joy and opportunity to you and your family!
We look forward to working with you in 2010, and will continue to provide superior services to all our clients.
As always, if you have any questions regarding the sale of your Structured Settlement, annuity or lottery winnings, please don't hesitate to contact us at (877) 836-4661 or info@Sovereignfunding.com
Posted by dspringer at 10:01 AM
December 14, 2009
The Necessity of Caution When Selling Structured Settlements
Late last week Senator Richard Durbin (D-IL) spoke to the National Structured Settlements Trade Association. He criticized pay-day loan companies for preying on desperate people and charging exorbitant fees which leave them with nothing.
Senator Durbin also cited examples of interest rates as high as 358 percent being charged by pay-day loan operators. “The same is true for factoring of [structured settlements],” said Durbin. There are certain practices we just shouldn’t be afraid to say are wrong.”
At Sovereign Funding we couldn’t agree more that these practices are wrong, but we also don’t believe all financial services companies should be lumped together with the worst practices of pay day loan companies. There is a stark difference between a responsible financial services firm that is willing to purchase your settlement, annuity or lottery winnings and the loan companies Senator Durbin so colorfully refers to as “reptiles.”
Individual Choice
Some of the politicians on Capitol Hill are fond of embracing colorful extremes because it gets them good press. The idea that structured settlements are wonderful tools to protect people who have been injured is true. However, the idea that every holder of a structured settlement is incapable of making informed financial decisions and therefore should not sell or even be permitted to sell their settlement is not an idea with which we can agree.
Every household has their own unique situation and America was founded on the idea that they should have the freedom to make their own choices. There are many instances when selling a settlement may make sense for the holder.
Normal Transaction Fees vs. Highway Robbery
The examples Senator Durbin sites underline the reason anyone selling a structured settlement should get quotes from several companies before they consider selling all or part of their settlement.
There is a fee involved in the sale of a settlement because the financial services firm is taking on a certain amount of risk. However, that said, no one in their right mind should sell an asset at a cost of 358 percent and we would not advise a client to do so.
Top Three Settlement Sale Pre-Cursors: Quotes, Quotes, and more Quotes
Even if the math seems too complicated to figure out exactly what percentage of your settlement is being taken in fees, getting multiple quotes should help make sure you aren’t being scammed. If the quotes are generally in line with each other, chances are they are reasonable. If there is a wide range of prices, someone is trying to take advantage of you.
Regulatory Protections
It is also important to note that the federal government and all but three states have laws that govern the sale of structured settlements. Court approval is required for the sale of a structured settlement in order to protect consumers.
If you have any questions about selling a settlement or annuity, we would be happy to talk to you. Sovereign Funding Group is a no pressure company that can help you make an informed decision when selling all or part of your structured settlement. Call us today at (877) 836-4661.
Posted by dspringer at 4:40 PM
December 7, 2009
Questions to Ask Your Structured Settlement Broker
If you have decided it’s time to sell your settlement or annuity the first step is finding a reputable broker. Like any industry, there are a number of people out there who will be happy to take advantage of your situation. In many cases, a seller may think they are getting a good deal only to find out later they could have gotten a lot more. If you ask the right questions, however, it will be very easy to verify that you are working with the right people.
Can you give me a quote?
This first step is the most critical. It may seem obvious, but not enough people get multiple quotes from multiple brokers. When it comes to structured settlement sales quotes can vary quite widely, so this is no time to be lazy. Most brokers will offer free quotes online. The quote should also be free. If a broker wants to charge you to evaluate the price of your settlement, it’s a red flag that you don’t want to work with that person, because it is outside the norm of standard business practices for this industry.
How long is the quote good for?
This may not seem particularly important at first glance, but it is. If someone is telling you to sell now or they may not give you what they promised they could, it is a pretty good indication that they may be eager to change the terms of the settlement somewhere down the line. This can be very costly if you get into the process of selling, only to realize they weren’t honest. Plus, if they are confident that they are giving you a good price they will stand by it. If they are threatening to revoke the offer if you don’t sell immediately, chances are good they don’t want you shopping around.
What is your experience?
This is a valid and important question. It is best to get into business with someone experienced in the field. When selling an annuity, settlement or other product there can often be legal or contractual issues among other things. Experienced brokers know how to deal with these and help cut the red tape to make the deal happen.
Can you assist me in figuring out how much to sell?
It is important to remember you don’t have to sell your whole settlement, but can sell partial payments as well. Figuring out what is the best decision for you and your economic situation can be very confusing. A good broker will consult with you to help you figure it out and will never pressure you to sell the whole thing if that is not what you want.
If I don’t sell my whole settlement, who will hold the remainder of the payments?
This is a critical question that can reveal you are dealing with the wrong broker. When selling a partial payment, the remaining balance should stay with the original insurance company, not the company buying the settlement. Some of the largest names in the industry do this and it is a severe conflict of interest that could hinder you from selling more later on if the need were to arise.
How long will it take to get my money?
This is another issue that can vary widely among brokers, so it should definitely be asked. You may be surprised to find the length of time some brokers will take before you see one penny.
If you are considering your settlement, Sovereign Funding Group can help. We are a no-pressure company that will help you make an informed decision when selling all or part of a structured settlement. Call us today at 877-836-4661.
Posted by dspringer at 11:31 AM
November 19, 2009
Sovereign Funding CEO Calls on Industry to Highlight Best Practices in Wake of Scandal - For Immediate Release
Columbia, Maryland -- November 19, 2009 – Sovereign Funding Group is calling on industry leaders to highlight their best practices this month, after a high-profile scandal in Florida has occupied headlines relating to the structured settlement industry. The Florida law firm run by Scott Rothstein was raided earlier this month and is facing allegations of defrauding investors out of $400 million in a Ponzi scheme involving structured settlements that doesn’t actually exist.
“The Rothstein case had nothing to do with the legitimate structured settlement industry,” said Sovereign Funding Group CEO, David Springer. “However, every time something like this happens it casts a shadow over the industry as a whole. There are a lot of people who don’t understand the benefits the industry offers to consumers, and that legitimate firms can offer real help in guiding annuity holders through the complicated process of selling all or part of a settlement.”
Structured settlements and annuities can be sold for cash when a consumer decides it is no longer prudent to receive payments slowly, or has an urgent need for a lump sum of money. All or part of a settlement may be sold at this time to a qualified firm or broker.
Springer says this is a good time to remind consumers about what a legitimate firm should do in terms of helping its clients. Customers should know that they can sell all or part of their settlement or annuity, and they should compare prices to ensure they are getting a good deal. In addition, they should be aware that if they only want to sell part of their settlement they should be careful that the balance of their payment should remain with the original insurance company, not the company buying the annuity. “This is a practice that is conducted by some of the leading names in the industry and is a conflict of interest and unfair to the consumer. We never do this at Sovereign Funding,” said Springer.
About Sovereign Funding Group
Sovereign Funding Group is a pioneer in the purchase of structured settlements, annuities, trusts, and estates. Sovereign Funding is committed to providing the finest services in the industry and will provide the best possible pricing for clients’ payments and will work to get clients their money in the shortest time possible.
Sovereign Funding Group
David Springer
Toll Free (877) 836-4661
International: (410) 730-4208
Posted by dspringer at 1:57 PM
November 11, 2009
How the latest Economic News Could Affect Your Structured Settlement
So first the good news: according to the numbers, there is no inflation in the economy at the moment. In fact, the inflation rate is currently slightly negative by slightly more than one percent. That’s especially good news if you are holding on to a structured settlement, because the one real flaw in such settlements is they are not scaled for inflation.
There was also good news on the national economy last week. The Gross Domestic Product expanded at three and a half percent last quarter, indicating the recession could be coming to an end. However, all this good news doesn’t necessarily mean it’s time to sit back and relax.
The economic growth has sparked anew a debate in Washington that inflation may start creeping back into the economy sooner than later. That could mean the value of your settlement may start changing in more ways than one.
Inflation: The Enemy of Most Annuities
While structured settlements can be a good choice for many people, inflation can really ebb away at one. Unlike pensions, which have protection against inflation, structured settlements do not.
To put this in perspective, consider a settlement worth $100,000 in 1994. Using calculators available at inflationdata.com, in the 15 years since that settlement inflation has risen 44.56%. This would mean that money today would be worth $144,560. However, because it is not scaled to inflation, it is still only worth $100,000. That means if you had had that money in hand, you would theoretically have made more than $40,000 (assuming you had not simply spent the cash).
Buy low, Sell High
If you have been seriously considering selling your structured settlement, but holding back because with negative inflation you are in pretty good shape, you have been right. However, if selling is seriously on your mind, it’s a good idea to do it before the inflation starts to hit. Because when it does, the overall sale value of your settlement is likely to drop. The trick is to get in front of the bad news, which means starting to act when things are still going well.
All of this can be rather tricky and nobody should wade through this mess alone. At Sovereign Funding Group we will help you make an informed decision when you consider selling all or part of a structured settlement. Call us today at 877-836-4661.
Posted by dspringer at 2:22 PM
October 15, 2009
AIG and Annuities: Answers to Your Questions
The AIG bailout was the kind of financial earthquake that sent reverberations that were felt throughout the business world, but perhaps few places as strongly as the structured settlement markets. AIG is a huge operator and many people were left – understandably- worried about the safety of their annuities. The government has stepped in for now, and it appears that things have stabilized. Insurance policies are tightly regulated and should have assets to pay claims. However, many people are understandably worried.
Unpredictable Times
According to the FDIC, 98 banks have failed so far in 2009. That is compared with 26 banks in 2008. There is no single source of clear information about insurance companies. On Capitol Hill, the House Financial Services Committee has proposed to create an Office of National Insurance. Such an office would be aimed at expanding access to information about the insurance sector. In the meantime, consumers who are concerned about the health of the company that holds their annuity can check with an independent insurance rater to see how their policy holder rates.
If it turns out that research indicates your annuity is held by an institution that is in financial trouble, it is a good idea to call the state regulators and see what sort of safety net is in place. Then you can calmly evaluate the merits of selling the settlement versus leaving it where it is.
Staying Calm through the Storm
Panic and financial decision making are a toxic mix. In short, if you hold some type of structured settlement, selling it in a panic based on the latest news is never a good idea and a responsible broker would not advise you to do so. That said it is a good time to take stock of your situation. Is your annuity your only asset? How large is it? These are good questions in a time of uncertainty in the financial system.
Are All Your Eggs in One Basket?
Most financial advisors first piece of advice to consumers is to diversify. This can be as simple as in addition to investments, own your house or apartment. That way there is money in both the markets and real estate. The logic is if one sector crashes you may still have value in the other sector. If your settlement is your only asset, you may want to split it up to reduce your risk exposure. The great thing about selling a settlement is it doesn’t have to be all or nothing. You may sell off part of it, and in one fell swoop have the ability to diversify your assets and spread the risk around. This could allow you liquidity to survive a time of transition in your work, go back to school, or purchase real estate in a buyers’ market. You could still keep part of the settlement to guarantee that some type of income is still available if any of these ventures don’t work out.
This can all be very daunting to a consumer. At Sovereign Funding Group we will help you make an informed decision when you consider selling all or part of a structured settlement. Call us today at 877-836-4661.
Posted by dspringer at 4:03 PM
October 11, 2009
Why a Bad Economy May Be a Good Time to Sell Your Settlement
To read a lot of the literature available on the Internet, you may think there is rarely a good reason or a good time to sell your structured settlement or annuity. While it is true, there are costs associated with such a transaction, there are several situations, particularly in the current sluggish economy, where selling your settlement or annuity for a lump sum could ultimately save you money.
If You Need to Buy a House
If your family situation has changed, or you have gone through a major relocation you may be looking at the real estate market right now. Although it may seem daunting due to recent price plunges in markets across the country, the fact is that now that the housing bubble has popped you can actually find good deals. Mortgage rates are at all time lows, but they are extremely difficult to obtain. The days of creative financing and low down payments are gone. However, if you have the money to put 20 percent down, you can get great deals at some of the lowest mortgage rates in history.
The housing market is down, but appears poised to recover. The National Association of Realtors’ Housing Affordability Index is the lower this year than in any previously published years, but it is starting to show some upticks. The National Association of Home Builders is predicting a dramatic increase in new housing and existing home sales during the next two years, also an indication prices are likely to start heading upwards. At the same time, the NAHB is predicting an increase in fixed rate mortgages from 5.15 to 5.74 percent and in arms from 4.84 percent to 5.25 percent during the next two years.
Consumers must simply weigh the cost of selling an annuity or settlement against paying higher housing costs and higher interest rates. This depends on each individual’s situation and the amount they would pay on a house, but certainly could be a money saver in many cases.
A Need for Credit
If you are self employed, run a small business, or have urgent need to make a major purchase, chances are you are relying or under normal circumstances would rely on a credit card. According to the National Small Business Association, credit cards are now the most common source of financing for small businesses. However, the availability of this source of funding is drying up or becoming extremely expensive.
Lawmakers passed sweeping credit card reforms this year that will limit the industry’s ability to raise rates and fees. Ahead of these regulations being enacted, issuers have cut credit lines and are increasing rates rapidly. According to Creditcard.com’s Weekly Credit Card Rate Report, the national average on credit cards is 12.64 percent and appears to be trending upward. These costs need to be weighed against the cost of selling an annuity or settlements.
Paying for College
If you have a child, or a number of children you are expecting to send to college, this may be one of the most beneficial reasons to sell off an annuity.
Many states now have college pre-payment plans where you can pay tuition now, and lock in the tuition rate, regardless of future increases. According to the College Board’s Annual Trends in College Pricing Report, tuition at four year public colleges rose at an annual rate of 6.4 percent, grossly outpacing inflation year after year. Two year public college tuitions are up 4.7 percent. Using a lump sum to lock in tuition early can save tens of thousands of dollars.
While there may be a depth of financial information out
there about the pitfalls of selling off your settlements, there are some
distinct advantages as well. Like any other major transaction it pays to do your
homework. Only you know exactly what your financial situation is, but a
reputable firm will work with you to figure out your needs, the costs, and how
best to maximize your financial potential. A bad economy may just translate
into a good time to put your money to work.
At Sovereign Funding Group we will help you make an informed decision when you
consider selling a structured
settlement. Call us today at 877-836-4661.
Posted by dspringer at 4:48 PM
April 24, 2008
Factoring 101: The REAL Truth About Servicing
In reference to Matt Bracy’s post on April 22, 2008 “Factoring 101: The Truth
About Servicing”, the facts are as follows:
1. No annuity issuer in the structured settlement writing business has ever
refused to permit an annuitant to sell only a portion of periodic payments (ie
100 of 250 payments) or sell just lump sums or periodic payments in a mixed
payment scenario.
2. To our knowledge, only one annuity issuer out of approximately 39 issuers who
write structured settlements refuses to “split” individual payments (ie refuses
to cut two checks if the annuitant wishes to sell only $400.00 of a series of
$1,000 monthly payments.) The other 38 annuity issuers permit such splitting.
3. In the limited circumstance where the annuity issuer refuses to split, our
company arranges for an arms length, independent and bonded servicer to service
the payments. We do not service the payments ourselves as we believe such is a
conflict of interest.
The bottom line is that companies that engage in routine servicing do so with
the objective to eliminate competition and low ball offers to annuitants who
later want to sell the remaining payments. The practice is extensive and
long-standing and the fact that a company like Settlement Capital (whom we have
proof has serviced payments in a #1 scenario above) is trying to defend its
practice suggests that
Cravenho and
Darer have hit a raw nerve.
Written by David Springer the president of Sovereign Funding Group.
Sovereign Funding Group is an experienced, reputable company that offers
convenient, no-pressure services to help individuals with the selling of their deferred
structured settlement
payments.
Posted by dspringer at 8:41 AM
