Frank C. Kilcoyne, CSSC

An Intelligent Solution - At Last

By now I’m sure you have all seen that late night commercial featuring a hairy, two-horned Viking singing on a bus about how he “wants his cash and wants it now”. According to this witty/silly commercial, all he has to do is call an 800 number and all his troubles will be over - or will they only have just begun? Most of those firms don’t enjoy a good reputation for open dealing and fair pricing. As a wonderful start to the year, I am pleased to report that a much better option is finally now available.

Any educated person recognizes that pitches like the one described above are made by financial sharpies out to separate unsophisticated people from valuable assets on bad terms. Whether it be your grandfather’s gold watch, your next paycheck, your car title, or your guaranteed and tax-free structured settlement, the idea of quick and easy cash when someone is in a tight spot can be irresistible for some people.

Fortunately, not as many people fall for these deals as you might think (1) but the business is clearly wildly profitable for these unregulated Black Hats. At the kind of prices they charge, you don’t need too many suckers to start really ringing the cash register.

We hate people taking advantage of our clients and our industry has spent a lot of time and money over the past ten years getting important consumer protection legislation enacted both at the federal and state level. This has helped, but has not cured the problem.

But now the most natural and healthy solution may have finally arrived: good old American free-market competition.

Today, if a structured settlement recipient finds themselves temporarily short on cash, they no longer have to deal with late night TV people working from call centers out in the ether somewhere. They can now simply talk to a bank and apply for a loan. And not from any fly-by-night outfit, but from a fully-regulated national bank charging far more reasonable rates.(2)

Why is this important?
Because up until now, payees who might need emergency access to the value of their structured settlement payments had no option but to do business with the “Cash Now” payment purchasing companies - people who were always expensive and sometimes harsh in their sales tactics.


What makes this different?
-Instead of having to permanently sell their valuable future payments, people with a structure can now borrow against the value of those payments, just as they might borrow against the equity of a home.
-They are dealing with a federally regulated financial institution that charges much lower rates, instead of having to negotiate with an unregulated factoring company that charges whatever they can get away with.
-The repayment plan can be automated and established for just a portion of the payment stream, as needed. Once the loan is repaid, the client’s payments can click back up to their originally scheduled amount.

Who is eligible for a loan?
Most individuals receiving payments from a structured settlement or annuity will be eligible but not all. Qualification for a loan will depend on the design of their structure, a review of the settlement documentation, and review and approval of a loan application. Eligibility generally has more to do with the timing of their payments than security of the assets (nearly all structures are backed by “investment grade” insurance contracts).

What else do they need to know?
These transactions must still be court-approved in the states where laws require it. Go here for more information.

What’s in this for JMW?
We have no financial stake in loan programs and no affiliation with any bank offering them. However, these are such a better financial deal for structure recipients that we want all our clients to know about them right away.

If you have ever hesitated to recommend a structured settlement to an injured claimant out of concern about bus-riding Vikings, you can now relax. In fact, knowing that a traditional, open, fair, and fully-regulated source of emergency cash is also now available opens up all kinds of terrific planning options for us.

Properly designed structured settlements provide unsurpassed financial advantages to injured plaintiffs. Thanks to an intelligent solution, they can enjoy the benefits of this approach with one less risk to worry about.

Would you like help crafting a settlement to meet a claimant’s short- and long-term needs?
Call Frank C. Kilcoyne, CSSC at 800 544 5533. I am here to help.

 

(1) Based on legal filings from these very firms, fewer than 10% of structured settlement recipients cash in payments. That means that 9 out of 10 people like and keep their structures.

(2) The first loan we examined charged a fixed rate of only 8.5%; that is half - or even a third - of what some of those “opera singers” charge.