Sometimes in life we delay looking for solutions to our financial problems rather than dealing with them head on. This tactic rarely works because financial problems tend to become worse as the interest fees and penalties continue to grow. Perhaps the fear, depression or mistruths keeps us from realizing all the options available.
When you’re suffering financially waiting for payouts from a structured settlement annuity isn’t the most convenient way to get money. Clearly it would help if you can have access to your money sooner perhaps in a lump sum payment. Maybe you thought about looking into it before but delayed calling because you have poor credit and were afraid you wouldn’t be approved. The good news is that selling your future payments allows you to get the cash you need without borrowing money. It is not a loan it is a transfer of the legal rights to your future payments. So there is no money to pay back or credit approval.
The only way to improve your credit is to pay off your debt and selling your structured settlement could be the key to financial stability. Use the cash lump sum to pay off your credit cards or avoid foreclosure and invest the remaining funds to start earning interest for you. It is time to take control of your finances and reap the benefits of your money.
Working with Rescue Capital to sell your structured settlement for a lump sum has some benefits too. We can custom tailor the package to suit to your needs and goals. They can help you develop a plan to pay off your debts and work with your creditors to pay off the debts immediately. We’re also here to answer your questions without delay. Remember, the money is legally your property so why not use it to suit your needs.
You don’t have to sell you entire settlement. You can sell only part of your settlement, keeping some of your scheduled payments and have an influx of cash for your immediate needs. Cashing out your structured settlements can give you more financial freedom which is something everyone can use.
Don’t delay getting the facts about your financial situation. Call Rescue Capital today to discuss your situation and make your structured settlement to work for you. Call 866.688.3532 for your free no-obligation quote.
Once again payday loans are a trending news topic. Just in the past five days, Pennsylvania and Delaware have introduced legislation to regulate the practice while payday loans from banks are now part of a FDIC probe. Two tribal nations in Oklahoma were cited in a FTC complaint and payday loan lead generation website MoneyMutual.com has also come into fire for its auctioning practices. While some groups and individuals feel that there is a need for these types of businesses, there is a need to protect consumers from themselves as well as predatory, deceptive or fraudulent lenders.
The PA house voted to approve an industry backed bill to regulate short-term lending. The bill, which hasn’t been approved by the PA State Senate, would require short-term lenders to obtain state licenses and limit borrowers to a 25% max of their gross monthly income or $1,000, whichever is less. Lenders could charge only 12.5% interest plus a $5 fee for each loan. For example, a $300 loan would cost $42.50 if it was repaid at the end of two weeks. However, consumer groups argue that the interest and fees would equal to 369% when calculated as an APR. PA currently has a maximum APR of 24% that can be charged by licensed lenders. [i]
One short-term lender stated that a 24% APR on a $100 loan is not economically feasible because only $.92 cents would be generated by the end of 2 weeks. If one person defaults, it requires 108 successful loans to recover the lost principal.[ii]
State lawmakers in Delaware have taken a different approach. Under House Bill 289, borrowers would be limited to 5 payday loans in any 12 month period including loan rollovers and refinancing. In addition, they could only borrow $1,000 or less and the state would establish a database to track the number of loans a person has taken. The Bill was established in order to prevent the number of defaults within the state. Currently there are 70 licenses lenders with approximately 200 locations throughout the state. The bill is waiting for the signature of Gov. Jack Markell.[iii]
Detractors of both bills believe that these restrictions will force individuals to go out of state or online where there are fewer restrictions. Currently 13 states prohibit payday loans, while another 21 state prohibit rollovers. Only 13 states have statewide databases that track these short-term loans.[iv]
Bank Payday Loans
In response to a February petition signed by consumer rights advocates, the FDIC announced it will investigate payday loans from banks. According to the petition, several banks including Wells Fargo were called out for their lending practices. In addition, the petition cites Fiserv’s lending software, which promises to increase fee income, as a contributor to the problem.
The Federal Trade Commission (FTC) complaint states that two American Indian tribes in Oklahoma are allegedly operation payday loan companies that add hidden fees, violate lending laws and threaten customers will false arrest for defaulting. In the complaint, the tribes are citing tribal immunity but the FTC states that tribal affiliation does not exempt them from federal law, in this case the Truth in Lending Act. On a $300 loan borrowers were told they would pay $90 in interest. But the lender automatically renewed the loan at the end of two weeks resulting in fees of $975. The FTC stated that they have received 7,500 complaints about the defendants over the past 5 years.[v]
You may have seen their commercials on TV featuring former talk show host Montel Williams as their pitchman, but Money Mutual isn’t actually a lender. They are a lead generation website that auctions off prospects’ information to the highest bidder. Sometimes it is a legitimate lender but other times it could be a fraudster who has enough information to make unauthorized withdrawals from unsuspecting consumers’ accounts. While the company claims to take “extraordinary” steps to protect their information, others might disagree. The Director of the Consumer Financial Protection Bureau is reviewing how the sites treat data and the FTC has received numerous consumer complaints about the firm.[vi]
The parent company of Money Mutual doesn’t believe that government regulation of the industry is necessary because the industry is policing itself. Consumer advocates believe that it is a huge risk to consumers. In one case, information collected by an unnamed lead generation website was used by call centers in India to badger consumers into paying debts they didn’t owe.[vii]
Thoughts and considerations
Payday loans are a tricky business. Some individuals believe that people without access to traditional forms of credit have a legitimate need for these services. Consumer advocates believe these types of products prey on the poor and cause them to become deeper in debt. The industry believes it doesn’t need government regulation but at the same time current regulation has caused individuals to seek riskier internet based alternatives. So in those instances is the regulation really helping?
One of the biggest issues is the lack of authority over the tribal nations; the government needs to get that issue under control. But there needs to be a balance. Obviously states will have a hard time finding legitimate lenders if the interest rate caps are so low that the lenders won’t make money. Consumers need access to cash in a hurry but they also need to some sort of regulation that will prevent them from financial disaster. While it is difficult to regulate the Internet, there needs to be a way of protecting users from fraud and harassment.
If you look at other industries such as structured settlement factoring, government regulation has helped the consumer. While not logistically possible for payday loans, each structured settlement factoring transaction requires court approval to determine if the sale is in the best interest of the seller. Perhaps a nationwide database used by lenders to limit the number of transactions an individual could take in a 12-month period we could prevent some issues. A cap in the loan amount could also help. There also needs to be uniform laws nationwide regarding this type of lending that applies to online as well as offline lenders.
Last week J.G. Wentworth released a press release stating that only 6.6% of structured settlement recipients sell their future payments and that those who do sell commonly cite getting out of debt, purchasing a home or vehicle, unexpected medical bills or continuing their education as reasons for selling. [i]
The press release stated that the study was based upon data collected by J.G. Wentworth over the past 20 years but it did not provide any further details regarding the data collection. For instance, how did they obtain the data; how many people were included in the study and did it include data from other factoring companies besides J.G. Wentworth/PeachTree? In addition, there was no mention as to whether discount rate played a considerable role in the annuitants’ decision to sell.
Back in 2008, J.G. Wentworth published an email survey of 115 respondents who previously sold some or all of the payments to J.G. Wentworth in exchange for a lump sum payment. In this survey, only 18% said they were completely satisfied with their structured settlement. 31% said they didn’t wish that there attorney negotiated a single lump sum payment which means that many of them would have liked a lump sum payment. 60% of the respondents sold their payments to pay bills while less than 5% did so in order to buy a house. 30% stated that they would not sell their payments again. J.G. Wentworth only released 9 questions to an industry blogger and did not reveal the remaining questions, the number of individuals the survey was sent to or any other circumstances that could have skewed the results of the survey.[ii]
In the 2006 The National Structured Settlement Trade Association (NSSTA) survey of attorneys involved in structured settlements (43 telephone surveys) and structured settlement recipients (1275 telephone and Internet surveys) 75% of annuitants were happy with their structured settlement and would recommend one. [iii]
In an AIG survey of 1,000 participants, 65% of respondents said they would elect a lump sum payment, while 26% stated that a lump sum was more appropriate to pay bills.[iv]
So if that many people wanted a lump sum payment then why aren’t they selling? In a review of 100 recent factoring transactions it was revealed that the average discount rate was 13.75% with 7.5% being the lowest and 20% being the highest. So you have to question whether the 93.4% of individuals that chose not to sell would have changed their mind IF the discount rate was closer to the 7.5% rate.
As structured settlement annuity premiums continue to decline (10% from 2010 and 20% from 2008)[v], there will be fewer annuitants available to market. While it seems perfectly logical that this would in fact lower the discount rate, if one looks at current trends it mostly will not occur.
For example, the top three companies spend millions of dollars a year in order to entice annuitants to sell. They’re all well established and are household names. Smaller, lesser known companies cannot afford to go head to head in advertising spends with these industry giants so they tend to focus on non-traditional marketings. While some sellers will seek out these smaller players in order to obtain better rates more often than not a first time seller will call one or two companies they see on TV. Which basically means they are going to receive rates of 13% or higher.
While the decline in annuities does not currently seem to be an issue for J.G. Worthworth/Peachtree who already completed a $244 Million Securitization this year[vi], one has to wonder whether primary market decline and increased competition combined with well informed, tech savvy consumers could adversely affect their business in years to come.
J.G. Wentworth had securitizations worth $469,000,000 in 2011 and $579,000,000 in 2010.[vii] This represents 9.4% and 10% of the annual premiums for those years.
Chances are you’ve seen at least one “get cash for your structured settlement or annuity payments” commercial on TV. But do you know what a structured settlement is, how do you get one and how you can get cash today for your future payments?
A structured settlement is a financial arrangement that allows court-awarded compensation stemming from a lawsuit to be paid in regular installments rather than in one lump sum. The payments are paid over a fixed period of time or over the recipient’s lifetime. Some settlements may include a portion of the money to be paid as a lump sum payment, while others only offer periodic payments.
Structured settlements are often awarded to:
- People with temporary or permanent disabilities
- Guardianship cases involving minors or persons found to be incompetent and workers compensation cases
- Wrongful death cases where the survivors need monthly or annual income
- Severe injury with long-term needs for medical care, living expenses and family support
Although the reasons vary, people often sell their structured settlement payments for a cash lump sum to
- Avoid foreclosure
- Pay for medical care/bills
- Make home repairs
- Pay off high interest debt
- Start a business
- Put a down payment on a house
- Buy a car
- Continue their education
- Pay taxes
A common underlying reason for selling future payments has to do with inflexibility of small stream of payments. Waiting for future payments doesn’t always work with your financial needs especially when you are struggling financially. That's why Rescue Capital is here to help. By purchasing all or some of your future payments for a cash lump sum payment, you can use the money the way you need.
Call Rescue Capital at 866.688.3532 to get your free no-obligation quote.