Selling Structured Settlement Payments And The interest Drag Factor

It is important to understand how "interest drag" can affect the sale of your structured settlement transaction. This little known tactic will not be explained in any financial book. Nonetheless, its one you should be weary of and understand how it drastically affect the sale of your structured settlement payments. Interest drag occurs when a structured settlement transaction is purposely dragged beyond its normal funding time by an unscrupulous factoring company. Depending on the size of the transaction, you can lose tens of thousands of dollars in interest. This occurs because the further out in time your transaction is funded, the higher the present value of your future payments is worth, and thus, the more cash you should have received. This difference is known as interest drag. Depending as to how the factoring company you are using handles it, you can be out a substantial amount of money. Some ethical companies will actually credit you the per diem interest lost due to the interest drag factor. We can define what a "normal" funding time is by assuming that any funding that takes place beyond 60 days is considered delayed. However, just because the funding is delayed beyond 60 days does not automatically translate into anything devious. There are many factors that go into how fast a structured settlement transaction is funded. Some factors include:

1.How quickly a court hearing date is obtained, 2.How quickly you provide all required documents, 3.How quickly the insurance company issues its Acknowledgment Letter confirming they have updated their records to reflect payments sold.

Even though there are no sure shot ways to know if you are dealing with an unscrupulous company or broker, there are common sense steps you can implore to protect you. For starters, you can contact the Better Business Bureau in the area where the factoring company you are considering using is located and find out about their complaint history. You can also perform the same inquiry with your state Attorney General's Office.