Structured Settlement Scam: How It Works
If you know what a structured settlement is and you're involved in a legal case on this topic, beware of the Sell Structured Settlement scam, aka the Client First Settlement Funding scheme. It happens a lot nowadays, and you could be the latest victim. How does this scam work?
Many people have been part of a lawsuit or court case that resulted in a structured settlement. What is a structured settlement? Instead of getting a lump sum, the payments are made on a schedule, such as monthly payments. This option is often sought after by the payer as there are certain tax advantages and savings by using this approach.
Thus, a lot of people — on the positive end of a settlement — get regular payments rather than a lump sum. This can be preferable if it is covering medical costs or other bills, and it helps the receiver from not overspending on the lump payment.
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However, there are times when the monthly payments aren't enough, and people look to get the full amount that is due them. One standard option is to sell their structured settlement to someone else for a fee, called a discount rate. For anyone that is considering selling their structured settlement, you need to be aware of scammers trying to take advantage of you.
Receiving a structured settlement can be a relief for people who have been involved in a lawsuit or court case. After often lengthy proceedings, the structured payment is an end to all the hassle and the payment of what is due.
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Maybe you, too, have experienced such a situation or may experience one in the future. Think of what relief this would be for you. Something that has caused you distress and hurt in your life resulted in you taking things to court. Maybe it was a car accident that left you with medical bills that you find difficult to pay. You went to court to get help paying your bills, and it was a long and hard-fought battle. Months upon months went by with you struggling with your medical condition while at the same time trying to deal with the court proceedings. However, that moment finally came, and you received your structured payment.
You can pay your medical bills each month while still maintaining a full-time job. Life appears to be good, and you are incredibly grateful for the monthly check that comes your way. Now consider a situation where you suddenly find yourself out of work. The check is not enough to cover your bills, and you are running the risk of defaulting on your mortgage. Thus, you begin to look at your options.
One of those options is to sell your structured settlement to someone to obtain a lump sum that can help you now. You begin to look around for someone to purchase it from you when someone offers to buy it at a discount rate. He says that he can provide you the lump sum payment on the same day. This sounds like a great deal to you: a discount rate and pays the same day? How can you go wrong?
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Unfortunately, scammers love to take advantage of people in their most difficult times, and that discount rate they are offering you is not even remotely close to a discount.
Scammers are ready and eager to take your structured settlement off your hands, especially if that means that they take an excessive amount of money from you. They will swoop in and offer discount rates of up to 30%, which is a horrible deal for anyone selling their settlement. Unfortunately, a lot of people feel they don't have a choice. They wouldn't be selling if they didn't desperately need the money, so they are often duped into taking it. These scammers make it seem like it is a great deal and that the offer won't last long. They use scare tactics to convince you that you need to sell to them right now, or they will lose out on a great deal.
Other scammers create bogus websites on the internet that appear like they represent legitimate companies. However, these sites are false fronts, looking to steal your personal information and sell them to the highest bidder.
These scammers will often offer a lump sum that seems too good to be true. They will make you think that you are getting close to the full value of your settlement, but it is all for naught. By signing up with these sites, you are putting yourself at risk of identity theft.
How To Avoid The Structured Settlement Scam:
Selling your structured settlement can be an unnerving thing to do. Most people don't want to sell, but they feel that they have to stay afloat financially. When looking to sell, you need to be cautious about who you sell to. With so many people trying to take advantage of you, there are things that you should look out for when picking who is going to buy your settlement.
The first and most important thing that you need to consider is the company that the buyer represents. Some websites won't even have a physical address listed for their company, which is a huge red flag. Any legitimate company that is looking to buy your settlement will have a physical office. You should also search online for reviews of the company that you are considering. The internet usually is a good judge of companies and will not hold back if they are ripping people off.
You should also ask some questions about the buyer that you are dealing with. Before you sign anything, you should always ask if the company that is buying your settlement has ever gone bankrupt. You can often do a bankrupt search yourself, and it is an important thing to know. How long a company is in business is also a key factor. A company that just started up and has no history is probably one you should be cautious of. You should also find out which insurance company the buyers are using. You should never sell to a buyer that is taking on the debt themselves because if they go bankrupt, you won't get your money.
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The Right Way To Sell Your Structured Settlement:
Before you sell your structured settlement, take the time to evaluate whether you need to sell it. There are obviously circumstances that it makes sense to sell, but some people also try and sell just because they want the money now instead of payments. When you sell, you lose out on the amount of money you would get if you didn't sell. So make sure it is for legitimate reasons.
You also should be aware that you don't have to sell the full settlement. You can opt to sell just a partial portion of your settlement, while continuing to receive your periodic income, albeit less of it. You can also choose to sell it in more considerable lump sums. So rather than receiving monthly payments, you can sell lump sums every year. This guarantees money in larger increments but still grants you the option of having a regular payment schedule. It is good to know which option works best for you.
When you do decide to sell, make sure that you are working with a reputable company. This was touched on earlier, but it is of vital importance that you work with someone that you trust. Once you have decided on the company, a team will review the settlement and the circumstances around why you need the cash. They will then offer an upfront sum to you for the release of your payments to them. This will come with a discount rate, which is similar to the interest you would pay on loan.
The discount rate can range from anywhere from 6 percent to 30 percent, but as mentioned earlier, you do not want to sell anywhere close to 30 percent. These rates are not a take it or leave it option. When working with a reputable company, you can negotiate these rates with them. It is also essential to shop around and get multiple quotes. If you have several options, it is easier to negotiate and get a rate that you are comfortable with.
Once you do accept one of the offers you have been given, the company will then file for a transfer of the structured settlement over to them. This will then go to court, and a judge will decide if the transfer is legitimate. The judge will consider everything from the reasons you are selling to the discount rate that you have been offered. After the judge rules on it, the exact process to transfer the settlement depends on the local jurisdiction, but you can be confident that you will receive your lump sum in due time.
How To Report The Sell My Structured Settlement Scam:
Make your family and friends aware of the Structured Settlement Scam by sharing it on social media using the buttons provided. You can also officially report the scammers to the Federal Trade Commission using the link below:
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