The Facts: Annuity Payments and American Debt

cash for an annuityWinning the lottery or winning a settlement in a lawsuit is certainly sensational. After all, who wouldn’t want to be awarded funds, almost as if they came out of the sky? But the truth is that it isn’t nearly as glamorous as it sounds. Most often, the winners of the funds or settlement are offered annuity payments over periods of time. This can be unwelcome news to people who imagined hefty lump sums that could lead to early retirement, the paying off of debt or medical bills, or the purchase of luxury items.

Indeed, debt in America alone is a huge problem, and it would be hugely helpful for many people to have money to get themselves out of it. Over 40% of American families spend more than they earn, and in February 2015, there was a daily average of 3,422 bankruptcy filings. The fact is that a lot of times, this debt has nothing to do with people not working hard, but more to do with extenuating circumstances like medical bills. Nearly 20% of credit reports are hurt by overdue medical bills, and once your credit report is low, it’s harder to take out necessary loans to start a business or go back to school.

Receiving a settlement of some sort is not uncommon — by the end of 2013, there were 34.8 million individual deferred annuity contracts in place, exceeding the amount of $2.58 trillion. For some, getting installed payments is a good way of regulating and budgeting their extra income, but for others, choosing to get cash for an annuity was a ticket out of debt and towards hope.

In order to get ahead, certain investments must be made. But the unfortunate truth is that sometimes these investments can backfire and cause personal progress to halt. For instance, getting higher levels of education can lead to a higher income. However, according to the College Board, the average cost of tuition and fees for the 2014-2015 school year was $31,231 at private colleges.

The fact is that the way you decide to receive your lottery payouts is really up to you, and depends on your unique financial situations. Choosing to sell your structured settlement and get cash for an annuity might be the right ways to reduce your debt.

3 Ways to Reduce Debt: How You Can Change Your Life

cash for a structured settlementOne of the unfortunate truths of life today is that debt is a very real problem for millions of Americans and people world wide. Indeed, across the average household, Americans owe $11,244 in student debt, $8,163 on their autos, and a whopping $70,322 on their mortgages. What isn’t accounted for in those figures is credit card debt, which many adults accrue as they get older and other debts grow harder and harder to pay off. A recent survey showed that only 37.4% of credit card holders pay their balance in full each moth, and about 15.9% pay the minimum balance.

While these figures are discouraging, they are not the be–all and end–all. In fact, with a combination of several measures, including smart spending and austerity measures, normal people are able to get out of debt by pulling themselves up by their own bootstraps. Here are a couple of tips for evading debt and climbing your own way out of it:

  • Experts report that there are several methods for reducing the pain of getting out of credit card debt. One way is to contact the issuer of the debt and inquire about waiving a late fee or reducing the interest rate on the card. A survey from CreditCards.com found that when people asked about waiving fees, they were 80-85% successful, and were able to reduce card interest rates by about 60%. It never hurts to simply ask!
  • If you have received a settlement or won a lottery annuity, it may be worth it to sell it for a lump sum. Getting cash for a structured settlement can seriously even things out for you — the less time you spend paying back loans, the less interest you have to pay, and the more time you’ll have to work on earning a positive bank balance for you and your family.
  • Planning a budget, as cliche as it sounds, actually works. Keep track of the amount you save everyday and put that right towards your debt — you’ll be surprised to see how fast impulse buys, lunches, and coffees out add up and reduce you debt.

Whether its the decision to get cash for a structured settlement, reduce debt by changing your lifestyle, or negotiate with your credit card companies, don’t loose hope! There are many ways to reduce debt within your reach.

selling a structured settlement

Why You Might Want a Lump Sum for Your Structured Payments

If you have come into a large inheritance, settlement, or some sort of lump sum, you will need to take the correct steps in securing those funds and making wise decisions. A financial adviser is your best bet. Usually when you win a lawsuit or are owed a large amount of money, you will receive it in payments every month for number of years. This can be beneficial, because over the long run, you would receive more money than if you were paid out in a lump sum.

However, it can also be frustrating if you need to make a large purchase, pay off medical bills, or have some other financial necessity. You would know that you have this money coming to you, but still have to save up all the small payments in order to take care of whatever you need to pay off or buy.

Luckily, there’s another option.

Lump sum for Selling a Structured Settlement

There are companies that are willing to buy your annuity settlement payments for an agreed upon amount and pay you out the total in one lump sum.

Why you might need a lump sum

Medical bills
If your settlement is coming from some sort of worker’s compensation claim or a car accident that was not your fault, you may have had to be hospitalized or receive physical therapy. These things can get expensive, and insurance does not always cover everything. Even if your insurance does cover most of your treatment, you may have high deductibles or co-pays that need to be taken care of before you could even begin treatment. If this is the case, those payments need to be made immediately. Otherwise, your body may begin to heal itself incorrectly without the therapy or surgery it needs. Selling a structured settlement and being able to have that lump sum of money would help to alleviate the stress of having to figure out how to pay those medical bills on time. In 2014 alone, 64 million people admitted to having major trouble paying regular bills, because they had to pay off their medical debt. Also, nearly 20% of credit reports are hurt simply because of overdue medical bills.

Transportation
If your car was wrecked and you need to buy a new one, insurance can take a long time to actually cut you the check for your totaled vehicle. Insurance claims can take months to process. Selling a structured settlement for a lump sum of money will help you purchase your new vehicle right away, so that you have a means to get to work and elsewhere. Once the insurance claim is processed and approved, you can always — in essence — pay yourself back.

Large purchases
Buying a house, a boat or another large purchases can be a time sensitive matter because of changing interest rates and other buyers. If you have something in mind that you need or want to buy, having small payments given to you every month will not help you even if they do equal out to more in the long run. If you have to wait a year in order to make the purchase you need, the house or item could be off the market already. Don’t make the mistake of finding a great buy and then putting it on the back burner. If it really is a good deal, chances are someone else will swoop in and buy it out from under you.

Debt
We are all looking for ways to reduce debt. Selling a structured settlement may be the answer to your problems. In February 2015 alone, there were 3,422 bankruptcy cases files. You do not want to be added to that statistic. While a bankruptcy is not the end of the store, it takes a lot to be able to come back from one.

Why You Would Want to Get Cash Now for Settlement Payments

how to get money from a settlement

Structured settlement annuity payments are a very common way for them to receive settlement money. Getting payments in pieces helps lower the risk of going through the money too soon if it were paid out in a lump sum. At the same time, that might not work for you. If a lump sum is what you prefer, you can actually sell your annuity to a company that will pay you all at once.

How to Get Money from a Settlement Now
Basically, when someone who is owed structured settlement payments calls, a team will take a look at the settlement, and also at why the person wants or needs the cash now. Should they approve the application, they will offer the applicant a certain amount of money to buy their payments. There is a discount rate included. which is usually between six and 29%.

Generally, a negotiation between the payee and the company will take place if the company is open to the idea. It’s not a one time offer and the company will often take negotiations in to consideration.

After the payee accepts an offer, the company will begin the petition to transfer the structured settlement to the company.

At this point, a judge could still stop the agreement. They are the final decision maker when it comes to the application getting approved. A judge will take an unbiased look at the situation and make a decision based on why the payee wants the money now, what the rates are. and what kind of reputation the company has.

If the judge approves, the structured payments are sent to the company, which will pay out the lump sum. The whole process only takes two or three months to complete.

Pay Off Debt
In the United States, the average household has about $15,000 in credit card debt and a total of around $115,000 in other types of debt, including school loans, car loans, mortgages, and more. Receiving a lot of money at once could put a huge dent in that debt or maybe even pay it all off, depending on how much money you are able to get. Just imagine what a burden will be lifted off your shoulders when all of that debt is erased from your record and you can start building credit again.

Make a Large Purchase
Did you know that about 26% of Americans are unable to pay their bills on time? If you sell your structured payments, you could use your lump sum to pay cash on a house, so not only will your monthly mortgage payment be low, if not completely paid off, but you can finally live exactly where you want to and give your family the kind of life that you’ve always wanted to provide. Or perhaps you want to finally buy that new car that you’ve had your eye on or make a significant investment for your future.

Pay for College
Household income has gone up by 26% in the past 12 years, which sounds great, but the problem is that the cost of living has also increased by 29% in that same time frame. This makes it almost impossible for average income households to save money for anything significant, such as sending your kids to college. All parents would love to finance a college education, but not all are able to. If you can see how to get money from a settlement now, then your kids will not have to begin life with the same kind of debt that you did, because you could use that lump sum to send them to college.

If you decide to go this route, make sure that you are well informed about the process and the company and the pros and cons.