Understanding Structured Settlement Buyers: What You Need to Know

When considering the financial implications of a structured settlement, it's important to understand the role of a structured settlement buyer. A structured settlement buyer is an individual or company that purchases all or part of your structured settlement, providing you with a lump sum payment in exchange for future periodic payments.

What is a Structured Settlement Buyer?

A structured settlement buyer (also known as an annuity buyer or structured settlement annuity buyer) acquires payment rights under a structured settlement agreement. This means that instead of receiving payments over an extended period, the buyer gives you an upfront lump sum payment. These buyers typically operate like factoring companies, who manage the sale of structured payment rights.

The Types of Parties Involved in Structured Settlements

When a structured settlement is initially established, one of the following parties acts as the buyer:

The Defendant: In cases where a defendant is liable for damages and agrees to a structured settlement to provide regular payments, they may serve as the buyer. The Defendant’s Liability Carrier: The insurance company that covers the defendant may also purchase the structured settlement payments. This provides financial security for both the defendant and the injured party involved in the lawsuit. A Qualified Assignment Company (Pursuant to IRC 130(d)): These companies specialize in buying structured settlement payments and have ensure they comply with tax laws.

Common Pitfalls in Choosing a Structured Settlement Buyer

While there are legitimate buyers who are skilled in structured settlement transactions, it's crucial to be aware of some common pitfalls:

Reckless SEO Companies: Some entities engage in aggressive SEO practices to mislead potential sellers, falsely marketing themselves as structured settlement buyers. These companies might exaggerate the benefits of such a transaction without fully understanding the long-term financial impact. Inaccurate Labeling: Some companies inaccurately label themselves as structured settlement annuity buyers when they may not meet the requirements or have extensive experience within the field. This can lead to misinformation and dissatisfaction among the sellers.

How to Identify Reputable Structured Settlement Buyers

To ensure you're working with a reputable structured settlement buyer, look for the following:

Reputation and Experience: Check reviews and credentials. Legitimate buyers should have a track record of successful transactions and be recognized by industry organizations. Transparency: A reputable buyer will provide clear and honest information about the transaction process, costs, and any potential tax implications. Regulatory Compliance: Ensure the buyer adheres to all relevant laws and regulations, such as those outlined in IRC 130(d) for qualified assignment companies.

Conclusion

Selecting a structured settlement buyer is an important decision, and it's crucial to understand the potential impact of such a transaction. By being informed and cautious, you can ensure that you make the best choices for your financial future.