by John Darer ® CLU ChFC CSSC RSRP CLTC
A June 2015 post by a structured settlement payee on Reddit highlights a financial dilemma in which he contemplates his options. including selling structured settlement.
The structured settlement annuitant says he " was in a terrible car accident several years ago. (Truck driver who struck me admitted fault, insurance company was quick to pay out because it was very obvious their client was at fault.) In order to get the most from the settlement I was advised to accept a structured settlement that pays out a monthly amount that keeps me comfortable (as far as bills, food, etc) and guaranteed lump sums every 5 years". [ emphasis added]
He goes on "I received a large chunk of the settlement and used it to purchase a home outright, a vehicle, pay off my medical bills, and pay to put myself through college since I cannot return to my previous line of work due to my physical disabilities. I paid to have the home inspected, the plumbing inspected, and the furnace inspected. I thought I was doing everything right and
everything was coming up..(good for) Me."
"I do not qualify for a loan even though I own my house because I have no verifiable income aside from the monthly payout which, as I said, keeps me comfortable but doesn't allow me to save anything (or make payments on the loan, in the eyes of the bank). Until I find work I am broke - except for the structured settlement moneys." [emphasis added]
"I have been in contact with every structured settlement company I could contact to find out what my options were. I've worked the numbers as much as I could and have about the highest bid I will get from anyone. I will be taking a big hit - I'm essentially buying a little less than 1 dollar for 2 dollars and I'm told this is the best I will get." [ emphasis added]
"But I REALLY don't want to lose so much money from my structured settlement....Is it better to take a significant hit to cash in part of a structured settlement or try to fall on the mercy of public assistance? Are there any other options besides the standard structured settlement sharks (JG
Wentworth, Peach Tree, Oasis, etc)?"
I think the posts says it all. The annuitant understands that the amount of cash now for structured settlement sucks. The annuitant was sensible in that he allocated a significant amount of upfront cash and the structured settlement payments to to keep himself comfortable. The annuitant admits that he has "always been poor with money and this (structured settlement) keeps him in line, but according to everyone else he made a terrible mistake and now he is terrified they are right".
Read the fill Reddit post and the comment thread here. By the time I post this you can be sure that some of the less savory denizens of the structured settlement factoring market will be posting trackback links.
This man could have used a settlement planner and someone with Sudden Money or transition expertise at the outset, someone who could have assisted him in managing his cash and wealth orientation. It's as an easy mark for some cash now pusher to target the structure because that's what they do. It's important for people to learn how to better manage money and short term and long term debt and to have an emergency fund. That being said the annuitant does not demonstrate the impulsive characteristics of the "nutritious" low hanging fruit, the figurative seal in the "sharks'" diet.