At times settlement claimants are faced with financial constraints. It is for this reason that most persons are forced to cash in their settlements in the long run. The redeemed money is therefore used to settle expenses that are urgent in nature such as settling of debts. It is therefore vital for one to assess various factors before redeeming the security.
Factors to consider before redeeming a security for cash
Begin by assessing the portion of security you wish to sell. Examine if it is that substantial and if it can affect the future periodic payments one gets over years. Check for both pros and cons before selling the security and its future.
The country’s economic performance need to be checked. This is where factors like inflation and deflation come in. Either of them will have an impact on the future value of security and may prompt a person to dispose the security in the present discounted rate.
Remember to check for other factors like cost of transaction. Check for statutory charge. This maybe taxes that may lower the amount of cash one expects if the security is redeemed.
Cash payment process
Before handing any cash to the seller, validate the reasons behind the sale of the annuity. Engage a lawyer or a financial expert to help in such situations. Proceed to checking competitive present discounting rates in order to get a good bargain from the transaction.
Contracts or any agreements ought to be in writing. Some third party firms or buyers may offer part of the total sum if need be. This helps sellers to settle pressing matters like clearing of debts hence avoid cases of being declared bankrupt.
Proceed to setting a court date in order to ensure each reason given is legal. Assure the judge that dependents are secured in terms of finances and hence ensure they are catered for. After this process, the court may give a go ahead for money to be wired to the sellers account. In most cases, a cheque or payment in cash maybe used by the buyer in the end.
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