Many consumers want to know how long it really takes to complete a settlement factoring transaction.  There are some companies that will inform potential customers that they can expect funds within 2-4 weeks.  What they neglect to tell the customer is when they are starting the clock on the 2-4 week time frame.  

Once the consumer and the settlement factoring company have agreed upon the pricing, the first step in the process is the disclosure statement. This must be sent out to the consumer prior to entering into a binding agreement.  Most states follow the model act that requires the disclosure to be sent 3 days before signing the transfer agreement.   Most of the other states require the disclosure to be received 10 days prior to incurring any obligation.  There are less than a handful of states who do not have a waiting period at all.  

Once the transfer agreements are sent, the consumers will usually take some time to review all the documents.  While some states make it a requirement to seek independent legal or financial advise before signing the transfer agreement, the majority of state laws allows the consumer the option to determine if they need to seek this advise or not.  The timing of this part of the process is completely up to the consumer.  In general, it can take consumers one to two weeks to return the completed transfer agreement.  

Once the transfer agreement is returned to the factoring company, some underwriting / due diligence is required to insure everything is in place for the court order process.  The time is takes to complete this process will depend on how much documentation the factoring company needs to complete the transfer process.  This process will vary from customer to customer as it can be difficult to obtain some of the necessary documents required to obtain the court approval. However, if a consumer is able to provide the factoring company copies of the required documents prior to or at the time they return the transfer agreement, the underwriting process can be completed in a matter of a couple of days.  Typically, this will take anywhere between one to three weeks (even more depending on how long it takes to track down particular information and documents.)

Once the transaction is approved internally, the factoring company must submit this to the court for final approval in order to avoid significant taxes.  The court must find that the transfer is in the best interest of the seller taking into account the welfare and support of their dependents.  The paperwork can be sent to outside counsel within 24 – 48 hours from the time of the internal approval.  The outside counsel will draft the petitions and orders to submit to the court. This process should not take more than a week.  

The majority of state transfer statutes requires all interested parties are provided a minimum of 20 days written notice of the actual court hearing.  Some states require less time and some require more time, but either way it is up to the court’s schedule as to when a hearing date will be set.  Each court is unique in how the paperwork is submitted, processed and ultimately assigned a court date.  This can sometime be scheduled out 21 –25 days and sometimes it is scheduled our 30 – 60 days.  The factoring companies have no control over the court and judges schedules.   

Assuming the transaction is approved, the factoring company will need the final signed order from the court.  Obtaining the certified order can sometimes take a couple extra days depending on the court.  Most factoring companies will be able to fund within 1 to 10 days of receiving the certified order depending on their internal funding abilities.  

With all that said, it is easy to see that it is next to impossible to expect to receive your money within 2 to 4 weeks.  However, it is important to keep realistic goals when considering selling your structured settlement payments.  A typical transaction will take between 60 to 90 days from the time the disclosure is sent.  This is industry norm. If anyone offers faster funding times, consider when they are starting the clock.  In order to get a more realistic view of the timing requirements, you should check your state statute to see exactly what the requirements are.  You can click here to see a list of all the state statutes.