Selling your structured settlement can be a great way to receive cash in a hurry. However, it's important to know all the details before you make this decision.
Structured settlements are carefully regulated through state and federal laws. They also require a judge's approval for every transfer.
How It Works
Structured settlements are a common payment stream that insurance companies use to pay out for cases of medical malpractice, personal injury and wrongful death. These payments are tax-free and don’t affect eligibility for government programs.
Many people choose to sell their structured settlement because they need a lump sum of money for personal, family or business needs. For instance, they might need cash for college tuition, a home purchase, a wedding or a new car.
However, they may be concerned that their future monthly payments will not be large enough to cover those expenses. They may be considering selling a portion of their structured settlement or even the entire annuity.
The process to sell a structured settlement is straightforward and requires a judge’s approval. You must establish your reason for selling and ensure the transaction is in your best interest.
Structured settlements are tax-free payments that help accident victims maintain their lifestyles. They also allow people to choose the amount of money they want to receive monthly or at certain intervals throughout their lives.
In order to cash out their future structured settlement payments early, recipients often turn to factoring companies. These businesses can provide an immediate lump sum of cash in exchange for the right to your remaining payments.
However, there are many factors that go into determining how much you will receive from selling your structured settlement. One of the most important is the discount rate a factoring company charges for your future payments.
Factoring companies calculate their discounts based on the value of your future payments and their own costs associated with advancing the funds. This percentage is typically between 9% and 18% of the total value of your payments, which helps cover their operating costs and risk from the annuity contract.
When you sell your structured settlement, you need court approval to make sure it’s in your best financial interest. This is a requirement under federal and state law.
It’s also worth noting that while the process of selling your payments may be simple, you should always do your research before making any decisions. This will help you increase your chances of receiving a judge’s approval and earn a purchase offer above your expectations.
If you’re unsure of your situation, it’s a good idea to talk to an experienced attorney. They can assist you with the entire process of selling your structured settlement.
Once you’ve submitted the paperwork, you can expect to receive a few mailings, texts or phone calls from buyers promising you a full buyout of your structured settlement. These are commonly known as “court scrapers.” Be wary of these types of offers and ensure they’re legitimate.
Every so often, great opportunities come along. Whether it’s a job opportunity, educational advancement, investment-related opportunity or something else entirely, these can help take your life to the next level.
But what if the opportunity doesn’t present itself or you’re not in a position to pursue it? This is where structured settlement sales can help.
Structured settlement buyers or factoring companies purchase the rights to your structured settlement payments in exchange for a lump sum cash payment. The price you receive will depend on the buyer’s discount rate and fees, as well as current market rates and economic conditions.