The Selling Process Flashcards
6 cards from real Sell Structured Settlement practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
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What is the term for a company that purchases structured settlement payment rights from a payee?
Answer: Factoring company
Factoring companies (also called purchasing companies) buy the right to receive future structured settlement payments from the payee in exchange for an immediate lump sum.
When a payee sells their structured settlement payments, they typically receive:
Answer: A discounted lump sum less than the total value of future payments
Factoring companies apply a discount rate to calculate a present value, meaning the lump sum offered is always less than the total of all future payments.
What is the 'discount rate' in the context of selling structured settlement payments?
Answer: The rate used to calculate the present value of future payments
The discount rate is applied by the factoring company to convert future payment values into a present lump-sum amount, representing the buyer's profit margin.
What is the first step a payee should typically take when considering selling their structured settlement?
Answer: Consult an independent financial advisor or attorney
Before agreeing to any sale, payees are strongly advised to consult an independent financial advisor or attorney to fully understand the long-term financial implications.
Which document formally transfers the rights to structured settlement payments to a factoring company?
Answer: Purchase and sale agreement (transfer agreement)
The purchase and sale agreement (also called a transfer agreement) is the contract between the payee and the factoring company specifying the payments being sold and the lump sum to be paid.
How long does the typical structured settlement transfer process take from agreement to receiving funds?
Answer: About 45–90 days
The transfer process usually takes 45–90 days because it requires court hearings, mandatory waiting periods, and notification to all interested parties.