Everywhere you turn there is a story about home values, foreclosures, home loan modifications or pending litigation. While I could go on and on about the sorry state of the US housing market and all the reasons why a home loan modification should be avoided, I would rather end the year on a positive note. For individuals that have an illiquid asset such as a structured settlement annuity, a divorce settlement, a single premium immediate annuity, life insurance policy, inheritance, royalties, or even a pension there are better ways to avoid foreclosure.
For some, a foreclosure or home loan modification may seem like the only option. However if you have one of the previously mentioned assets you do have another choice. You can sell all or part of your future payments for a cash lump sum. Depending upon how much the asset is worth, you may be able to get enough cash to pay off your mortgage or at least get your payments up to date. There are no restrictions on what you can do with the money therefore you can use it to pay off medical bills or credit card debt. If you have any funds left over you can reinvest them or use them to start an emergency fund.
Unlike mortgages or loan modification programs there are no income requirements or credit checks because it isn’t a loan. There is no affect to your credit score and you can’t default. You do not have to pay any of the money back either. According to John Zepeda at Rescue Capital, “we see individuals who are selling their future payments in order to avoid foreclosure. As a result of being unemployed, they fell behind on all their bills including their mortgage. Luckily, they can use their future payments to get the money they need without incurring more debt.”
Sometimes people are unsure if their asset is something they can sell. Zepeda stated, “Rescue Capital hears from people all the time who are unaware that their asset can be sold on the secondary market. We evaluate the asset, determine its value and provide a free no-obligation quote to anyone who calls us”. Often the rates are considerably less than credit card interest rates or high interest mortgage rates. Rates vary by company so it pays to shop around in order to get the best deal.
Some of the individuals hit the hardest during this economy are the ones that are involved in a lawsuit that hasn’t settled yet. Since court cases can take years before they settle and they can’t work because of their injury, it strains them financially. For these individuals, a pre-settlement cash advance may be an option. It allows them to receive a percentage of their money upfront so that they can stay afloat while they are waiting. It gives them the ability to hold out for a better offer and not just jump at whatever is given to them because they are desperate.
If you are heading into foreclosure, struggling financially or just want to pay off your debt; consider selling your illiquid assets for a cash lump sum. With today’s competitive rates, it makes sense to pay off your long-term debt now rather than paying huge amounts of interest to banks.