Strapped for cash? You are not alone. Due to these challenging times in our economy, many people are a little short on funds. Whether it is to avoid foreclosure, pay medical bills or just make ends meet, many individuals are selling their illiquid assets for a cash lump sum.
Most people who receive payments over time are unaware of the options they have let alone what an illiquid asset is or how to go about selling one. In a nutshell, an illiquid asset is an asset such as a structured settlement annuity, a divorce settlement, a single premium immediate annuity, fixed annuity, life insurance policy, inheritance, royalties, or even a pension that cannot be surrendered or returned back to the entity that is issuing the payment. As a result the individual would have to find a third party that is willing to take over the payment stream in exchange for a cash lump sum. Traditionally, all of these assets were considered to be illiquid however, as the need for liquidity arose over the years so did potential buyers for these products and now many of them can be sold on the secondary market.
If you are receiving payments as the result of a lawsuit or have one of the assets mentioned above you may be able to sell all or some of your future payments for a cash lump sum. To make sure you are getting a deal that is in your best interest follow these steps.
Step 1:
Look for a few funding companies with solid reputations. Research them by checking with the Attorney General’s Office in your state or looking them up on the Better Business Bureau’s website to ensure there are no complaints about them.
Step 2:
Call around to a few companies to get quotes. Get at least 3 offers to determine which one is best. Review your paperwork and discuss all the options available to you. Remember, to get a concrete offer in writing. If the company you are talking to won’t put it in writing go elsewhere. Trustworthy companies will return your calls and put their offers in writing.
Step 3:
You review your options, pick a company you are comfortable with and decide whether or not to go forward with the process. If your representative avoids your calls, gives you the run-around or doesn’t explain things to you, they may not be the right company. You deserve to be treated with respect and not like a number.
Step 4:
Ask about deferring payments. Perhaps you just need a little bit of money to finance a move or start a business. By deferring the sale of your payments you get the cash now while delaying the reduction of payments until a future date.
Step 5:
Once you have decided on a company they will send you a purchase agreement. Review the purchase agreement and send it back to the company signed and notarized. Don’t forget to ask about direct deposit.
Step 6:
Once your transaction and various approvals, if applicable, are completed your money will be sent to you.
For the most part, selling your illiquid asset is a pretty straight forward process. Rates tend to vary by company. Approvals, paperwork and the alike can vary by state and/or asset.
