Selling that Structured Claim Settlement (SCS)

If you have a structured claim settlement (SCS), given this economy and the heavy advertising by companies looking to buy up those structured settlements, you may be tempted to sell. Before you do, you will most likely wish to speak with a financial advisor that you trust. If you ultimately feel that cashing in your SCS is the best option, the following article outlines that process.

1. Shop around. Choose the right company to work with based on their reputation and sales terms, or their purchase offer. Ask a trusted financial advisor for a recommendation if you have not already decided who to work with. (Since any change in finances can potentially have tax implications, it is always a good idea to seek such a consultation.)

2. Formally accept the purchase offer. Once you have chosen a company to work with, that company will make you an official offer, telling you how much money you will receive and how much of your structured settlement payments they will take. In other words: how much getting instant access to your money will ultimately cost you. You will have a certain amount of time to consider the offer, after which the terms are subject to change. As with any other financial contract, your signature will be required.

3. Await a legal review by the applicable court. States differ in their requirements, but most will need you to submit to a financial review. The court will appoint a representative to review your financial situation and determine whether or not selling your SCS for a lump sum of cash seems to be in your best interest, or whether it would be better to leave the terms of the structured claim settlement as they are. Essentially, this is a pre-approval, and once it is granted, most states require a waiting period in which you may change your mind about the sale before it is done.

4. Submit to a documentation review. After your financial information has been reviewed and the court-required waiting period is through, your documentation is processed by the company interested in purchasing your structured claim settlement (SCS). This is just fancy wording for having your paperwork pushed through.

5. A legal request is made to the court. An attorney will review the settlement purchase paperwork to be sure that all legal issues have been addressed and resolved. The lawyer than sends the reviewed paperwork to the court on your behalf, making a formal request that the transaction be approved.

6. A court date is scheduled. Once the court receives your request via your attorney, you will be assigned a court date. The turnaround time is usually quick since this is considered a simple matter. Your case may be heard in just a few short weeks. You will be mailed a notice of the Court date.

7. The court appearance. You will be required to come to court on the assigned date and appear before a judge. The judge will review your paperwork, consider your situation, and speak with you regarding your decision. The formalities vary from state to state, but again, this is considered a simple matter and the actual court date should not be a cause of stress or concern.

8. The court renders a decision. After hearing your testimony and reviewing your paperwork, the Judge will decide whether to approve or deny your request for a cash out. If the Judge approves the deal you have made with the settlement company, he or she will sign the agreement. Often this happens during or at the end of your hearing (court date), but sometimes the Judge may take some time to consider and make a decision after the hearing. How long this takes depends on the Judge, but since this is considered a simple matter, it should not take long.

9. Inform the insurance annuity company. This would be the insurance company that the original structured claim settlement (SCS) was made with. When the sale is approved, that company which holds your SCS will be notified that your future payments have been sold, and who they have been sold to.

10. Receive your money. When the paperwork is finalized and the insurance company notified, you should receive the agreed-upon lump sum of cash shortly. You may choose to receive those funds by check, or simply have the money deposited directly into your bank account.

This article is approved for informational purposes only and is not intended to take the place of competent local legal counsel. It is always wise to consult a financial expert when making this type of decision.

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