Debt Settlement Companies – Tips For Choosing a Reliable and Affordable Company

There are several criteria you need to examine before choosing a settlement company. Let’s take a look at the important points of the settlement process and how settlement companies handle them:

  • Method of Paying Settlements
  • Fee Structure
  • Proven Record of Happy Customers
  • Rating With Better Business Bureau
  • Free Consultation

How Settlements are Paid – Lump Sum or Payment Plan?

When choosing a debt settlement company, one of the first things you have to decide is whether you will pay your settlements in a lump sum, or use a monthly payment plan.

Lump Sums

The best way is to pay your settlements is to be ready with lump sums. This gives you more freedom to pay your creditors off faster and negotiate lower settlements. If a creditor is ready to settle and an acceptable amount, you will be able to pay it.

Where do you get the settlement money? The usual places you can get these funds is a Home Equity Loan or Line of Credit (if you own your own home), a tax refund, gifts from relatives or cashed out investments.

Payment Plan

A payment plan allows to settle your debt without having to have a large sum of money up front. You put a monthly payment into “trust account”, run by the settlement company. When you have saved up enough in your account, the settlement company will negotiate a settlement with your creditor. Then you start saving for the next settlement, and so on.

There is a risk with the payment plan. Your creditors may not want to wait for you to save the funds necessary, and may send your account to collections or to the courts. Some settlement companies offer loans, similar to a consolidation loan, to allow you to pay your debts in a lump sum, then pay them back on a monthly basis. Most of these payment plans last from 3 to 5 years, depending on how much you can afford per month.

Fee Structure

There are usually 2 ways that a settlement company will charge for their services.

1) Based on the amount of debt you have or

2) Based on the amount of money they save you

With both methods, the company will usually charge you an upfront fee, usually called a “retainer fee.” A good settlement company will put this toward your first settlement, while another may treat it as an “setup” or “administrative” fee.

In method 1, the company will usually take a fee of about 15-20% of your total debt you are trying to settle. If you decide to use a monthly payment plan, most of this fee is usually charged in the first three months, and then a portion of your monthly payment after that.

Unfortunately, this type of fee structure leaves you paying a lot up front and then waiting a long time to save up enough to settle your debt. Often, a settlement company can shorten the saving period by doing “group settlements”, where they achieve a greater discount on your debt by lumping you with other clients who owe the same creditor.

In a contingency-based payment plan, you only pay after the settlement agreement has been reached and you pay the settlement company a percentage of the amount of money that they have saved you. In this performance-based model, they have more incentive to get you a lower settlement.

Proven Record

Many companies will provide you with actual settlement letters, to prove their success. A company with a good record will be able to provide you access to hundreds, if not thousands of these letters as proof.

Other companies offer testimonials, but those can be fabricated. Be wary of settlement companies that claim to guarantee settlements, because no company can. However, some will offer money back if they can’t settle a debt for you.

Better Business Bureau

Always check out the company’s BBB rating. This will give you a great deal of information about the company and a good feel for how they do business.

First, be sure the company is actually registered with the Better Business Bureau and has been in business for at least 5 years. You will be giving this company a lot of control over your financial life for a brief period of time, so be sure to do your homework in this area.

Important Points to Consider When Selling Structured Settlements

A structured settlement is a form of agreement or amount that you can claim at specific times usually at instances for example when you need to resolve a personal injury lawsuit. This can be provided as a lump sum payment or can be completed for how many years depending on the agreement of both parties. You have the option to sell this kind of claim but before making up your mind, you have to consider these key points in order to come up with the right choice.

First of all, you have to read the terms and conditions of the structured settlement. You must understand what the contract says about your annuity payment. You can have a legal consult to know about it further. Laws and regulations can vary from one state to another when it comes to acceptance of lump sum payments just like how they differ when it comes to the use of tazer guns. You must have a legal adviser who will enlighten you when it comes to these matters.

Secondly, before you decide to sell it into a lump sum, you need to do your homework on the companies where you can entrust your money and the one which will provide you with the reasonable amount. Since you will be getting the money in full, it would not be the same as the whole amount of the settlement. But you have to remember that it does not also mean that it is that low. That is why know more about trusted companies when it comes to your financial transactions.

Moreover, you have to accept the fact that you will not be receiving the full amount. That is why when it comes to making this kind of decision; you must have enough reason to push yourself to do this kind of action. It may be reasons like you want to invest the money on building a house or you do not have enough funds to start a business or even when you are suffering a great financial loss and you have no one to turn to.

Lastly, think of your future. You must also have the knowledge of what will happen to you when you will not be receiving the money that was supposed to be given to you at certain times for how many years. It is intended for your future and when you decide to sell your structured settlement, you must have foreseen where you will be able to get some funds for the years when your lump sum will all be gone. Do not only think of your short-term plans but also those for long-term duration.

These are the important points that you have to remember before deciding to sell your annuity payments. You must weigh your options since financial transactions are serious matters. These tips when followed would not give you too much pain on the head like experiencing the feeling of being hit with the runt stun gun. You will end up making the right choice.

5 Tips for Selling Your Structured Settlement

Consumers choose to sell their legal settlements (also referred to as structured settlements) for many reasons. While many sell their payments to help with college tuition, debt reduction, medical expenses or mortgage payments, most people sell their settlement to gain financial flexibility when personal or financial needs change. “The long payout periods of most structured settlements – typically up to 30 years – work well for many holders, but not all,” said Andrew Torre, Chief Compliance Manager for J.G. Wentworth. “Many people find that they need access to their money now to pay for legitimate needs.”

However, consumers often are unaware of their options when selling their structured settlements. What price is too low? Which company is reliable? Can I sell just part of my settlement? These are just some of the many questions that arise when considering selling your structured settlement. Torre recommends doing thorough research ahead of time. He offers these 5 tips to consider before selling a structured settlement:

1. Search for specialty finance companies that are able to purchase your structured settlement. Be sure to research their reputation and testimonials – what clients (past and current) say is invaluable.

2. Torre recommends not accepting the first offer to purchase your policy. Why? Browse multiple companies to make sure you’re getting the most value for your settlement.

3. Evaluate your current financial standings, and then decide whether you need to sell all or part of your structured settlement.

4. If you can’t understand the legal jargon, consult an attorney. Make sure you understand the documents and any tax ramifications that occur with liquidating your structured settlement.

5. Evaluate your financial obligations that will accrue in the future. Re-consider whether selling all or part of your structured settlement will be beneficial for you. Also, consider how accessing your assets will affect your income.

Bonus: Additionally, before you sell your structured settlement, be sure that the company you’ve chosen addresses all legal ramifications, Torre adds.