Creative Cash Flow Planning

Did you receive a court settlement as a result of an accident, injury, or
illness?  Are you now stuck collecting small monthly payments when you
really wanted all of your money up front?  After all, the money is yours,
right?  Why should you have to wait for years to collect all of it?

Well, the good news is that you do have another option.  Did you know
that the structured settlement that you’re receiving right now is a liquid asset
that can be sold for cash?  Did you know that you can sell your structured
settlement and receive a large lump sum of cash in return for it? 

Yes, it’s true.  You don’t need to settle for those small monthly
payments any longer.  You can trade in those payments for a large cash
payment immediately? 

Why would you want to sell your structured settlement?  There are many
good answers to that question and the answer will vary from one person to
another.  The bottom line is likely that you need money immediately. 
You may have had to wait a relatively long period of time to receive your court
settlement and you may have incurred numerous debts while you were waiting. 
You may not have been able to work for a time and the bills may have accumulated
as a result.  You may have incurred medical bills as a result of the injury
or accident which earned you the settlement.  Those medical bills will need
to be paid sooner or later.  It’s even possible that you waited for your
court settlement intending to pay off all of your debts, only to find that the
monthly payments do not allow you enough funds to be able to do so. 
Whatever the reason, you do have the right the sell your structured settlement.      

How does the sale of structured settlement work?  Essentially, a
structured settlement involves a third party (the defendant in your court case)
purchasing an insurance policy in your name, which pays you a pre-determined
amount of money at specific time intervals.  For instance, your structured
settlement may pay you $XXX.XX amount of dollars monthly, or quarterly, or
yearly.  The details will vary depending on your individual circumstances,
but the common denominator is a structured cash settlement paid to you, as
ordered by the court or defined in a settlement, at a regular time interval. 

You may have heard, or even been told by your financial advisor, that you are
not allowed to sell your structured settlement.  Strictly speaking, that
statement is true.  You are not allowed to sell the actual insurance policy
which was created in your name.  This insurance policy is the instrument
which guarantees you that the payments will be made regularly, as promised. 

However, you are allowed to sell the right to collect the payments on that
policy, which in essence, is what is referred to as “selling your structured
settlement”.  This is completely legal and is done relatively commonly. 
You’ve probably even seen the commercials on TV and heard them on the radio. 
There are numerous companies, both small and large, which will “purchase” your
structured settlement from you.

What can do with the money you receive when you sell your structured
settlement?  You can do anything you like with it!  It’s your money. 
You can use it to pay off medical or credit card debt.  You can use it to
fund your retirement, purchase a new home, a new car, fund a college education,
take a vacation, buy a business, start a new career, invest, play the stock market.  It’s entirely up to
you to decide. 

Is selling a structured settlement right for everyone?  No, absolutely
not.  In fact, we urge you to consider your situation carefully.  Some people like the security of a guaranteed payment every month. 
For some people, having their money come to them slowly over time makes it less
likely that they will spend the money frivolously.  And selling your structured settlement will also involve accepting less than the full value of the settlement.

When and if you do sell your structured settlement, it is unlikely that you
will receive the entire cash value of the settlement.  It is unusual for a
settlement not to be sold at a discount.  There are a few reasons for this,
but the most important of these reasons is what is known as the time value of
money.  What this means is that the dollar you hold in your hand today is
worth more than a dollar you may hold in your hand 10 years from now.  Some
people call this inflation, some know it as the rising cost of living. 
Whatever you want to call it, most of us are at least vaguely aware of the
principle, even if we don’t know it by name.  For instance, we all know
that it costs more to go to a movie today than it did 10 years ago.  It
costs more to buy gasoline today than it did 10 years ago.  It cost more to
buy clothing or food than it did 10 years ago.  And it stands to reason
that 10 years from now, it will be even more expensive to purchase these items. 

So, what does that mean to you in selling your structured settlement? 
By selling your structured settlement today, you are exchanging dollars received
today for dollars promised in the future.  And that’s where the time value
of money and the discount come in.  Let’s say, for instance, that you were
rewarded a total sum of $120,000 payable to you in monthly installments over the
next 20 years.  You sell the payments awarded to you in your structured
settlement for $100,000.  That means you will receive $100,000 today. 
For you, that’s a great thing.  But the person who just paid you that
$100,000 has to wait for the length of the term to collect all of the money due. 
This means that person has to wait for 20 years to collect all of their money
back.  Twenty years from now, those dollars will purchase far less than the
same amount of money would purchase today.  Are you beginning to see why
the discount is applied?  (*Note: these numbers are only used as an example
and are not meant to indicate what you might expect to be paid for your own
settlement.)

Is selling your structured settlement right for you?  The truth is only
you can answer that.  It will depend on your individual situation, your
individual needs and your expectations. 

First Class Cash Flow Handlers buys structured settlements, as well as any
other type of cash flow note.  For more information, visit our

cash flow website, or call us at (401)-258-7158.

The “Note
Owners Manual” is written specifically for those of you who are holding
owner financed seller carry-back notes.  The following is an excerpt
from the manual:

Default 

If the Borrower fails to perform any
significant part of the contract, the Seller may have the right, after
notifying the Borrower in writing of the exact nature of the default, to
take legal action.  If the default continues, the Seller probably has
the right to declare the remaining balance due and payable and, if the
default is not then cleared up or the loan is not paid in full, the
Seller can begin foreclosing. 

Defaults by the Borrower may include
failure to properly maintain the property, failure to adequately insure
the property, or failure to pay taxes on the property as they become
due.

The way Borrowers most commonly default
is, as you would expect, by failing to make timely payments.  If a
payment is ever late, we recommend taking the following steps:  (1)
Check the contract to see if a “grace” period exists.  If so, you must
honor it.  (2) If no grace period exists or if it has expired, phone the
Borrower and ask about the payment.  Insist upon payment, make a note of
the date and time of the call and keep this information with your land
contract.  (3) On the same day as the above phone call, write a letter
that identifies the default and summarizes any action the Purchaser has
promised to perform and mail it, certified mail, return receipt
requested.  (4) If the above steps do not produce the desired results,
contact an attorney immediately.  Trying to cure a default by yourself
can cause problems for you, the Seller. 

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Helpful Hint  

If legal action is required, a Seller
has the right to initiate foreclosure proceedings.  Find an attorney
with experience in the area of real estate foreclosure. 

Also, because your attorney may be
required to appear in court, it is best to hire one who lives near the
property in question.  This will save you from paying travel time and
other unnecessary expenses.

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Helpful Hint 

Declaring a loan to be in default and
starting the foreclosure process is a serious matter and should be
handled by an attorney familiar with the laws of the state in which the
property is located.  The biggest mistake made by Sellers in this area
is (1) trying to take matters into their own hands, and (2) delaying the
exercise of their rights.  Begin to think in terms of foreclosure when
the Borrower is one month behind, not three or four months.

——————————————————————————————– 

Remember, you are not the “bad guy”…the
Borrower is the one not making payments.  They can sell the property,
refinance the property or bring payments current.  The ball is in their
court, so to speak.  Explain the available options and tell the Borrower
you are prepared to bring legal action.  After an initial phone call and
a certified letter, only swift and decisive action taken with the
assistance of legal counsel is likely to cause them to act.  Be honest,
firm and considerate.  Don’t harass and don’t delay!  

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Helpful Hint 

Keep records of all written and spoken
conversations with the Borrower, including dates, times, and what was
discussed.  You’ll never know how or when these records will come in
handy until you need them but don’t have them.  Then it’s too late!

——————————————————————————————– 

A failure to enforce any clause in your
contract can, over time, establish the precedent that the clause is not
binding and has no effect.  In other words, actions speak louder than
words.  Consistent conduct over a period of time, in fact, can take
precedence over the actual wording on your contract in a court of law! 
In short, stick to the contract or be prepared to find it difficult to
enforce in court.

The “Note
Owners Manual” also covers topics such as the definition of a mortgage/trust
deed, components of the typical mortgage/trust deed, proper record keeping, how
to use an amortization schedule, handling property insurance and property taxes,
and much more.  It is available through
First Class Cash Flow
Handlers ($29.95).