Factoring process

Factoring structured settlement payments is not simple, but the process is straightforward. I have divided the process into two parts: the “Pre-Factoring Process” and the “Factoring Process.” The Pre-Factoring Process consists of practical tasks that must be done before starting the more formal process. The Factoring Process consists of meeting the strict legal guidelines required to successfully sell structured settlement payments.

Pre-factoring Process

1. Information Gathering

Bentzen Financial will need to spend some time getting to know you and your financial status. We will need to discuss your monthly income and expenses, dependents, Social Security benefits, Medicaid, and other government entitlement issues. The more I learn at the front end, the better I can help you and smoothly direct the process later.
2. Prepare Options

After Bentzen Financial has gathered the appropriate information, we will prepare financial options for you. First, we analyze the information we gathered from you and determine whether you are a good candidate for a factoring transaction. If we can find a better option to recommend, we will. Also, we need to minimize the chance of your transaction being disapproved by a judge. If a factoring transaction is called for, we will help select the payments to be sold and give you an idea of how much you will net.

3. Consultation

A plan is prepared and the options are discussed with you. We present the pros and cons of each option as they relate to your financial needs. We also explain the process that needs to be followed in order to meet the statutory requirements.
4. Required Documents

We need to obtain from you (or from your lawyer) copies of your annuity policy, the settlement agreement, and the Uniform Qualified Assignment form. These can sometimes be difficult to track down, but we can help you.

The Factoring Process

1. Disclosure

Our policy is to disclose everything we can so that you are comfortable with your decision to move forward. State laws require us to disclose certain things in certain ways. An outline of the mandatory disclosure terms will be discussed with you. Generally, this document will include the total amount of payments to be transferred over time, the gross amount payable to the transferor, the net amount payable to the transferor, the present value of payments to be transferred, the quotient, and the effective interest rate.

The agreement must be signed and we will maintain a copy of that agreement. The disclosure starts the clock for the statutory “cooling-off” period, which ranges from 0 to 10 days depending on the state. Click here to view your state’s statutory requirements.
2. Contract

A contract between you and Bentzen Financial will be drawn. This is a legal document binding you and binding us to the agreed terms. The contract must be signed and notarized by you after the “cooling-off” period has expired.
3. Notice to Insurer

We send a notice to the insurer making the periodic payments. We must give the insurer a 20-day advance notice of filing a petition to transfer payments. This gives the insurer an opportunity to object.
4. Court Petition

Bentzen Financial will hire an attorney to petition the court for the transfer of payments to us. We work with attorneys who are very professional and prompt, but it always takes them some time to perform this service.

5. Court Approval

The case will go before a judge to determine whether the requirements of IRC §5891 are met. You will be required to be present and may be asked to explain, in detail, any financial needs you may have to the judge. Some judges choose to ask a lot of questions and others don’t, but you should be prepared to be open and honest with the judge.
6. Acknowledgement Letter

Upon receiving court approval, Bentzen Financial requires a letter from the insurer acknowledging the transfer of the annuity payments.
7. Funding

You receive the cash you desired, adjusted for any contractual payments you received before approval. All outstanding liens such as taxes, alimony, child support, etc. must be paid first. Then, finally, you will get your money.