Sell Your Structured Settlement

Everyday millions of Americans are wondering whether they should liquidate their structured settlements into a lump sum payment that can cover various expenses.

Many people receive structured settlement annuities from an insurance company due to a personal injury or another lawsuit such as wrongful death or medical malpractice. Cashing out a structured settlement is a good way to gain access to a significant amount of cash for a financial emergency.

Is Selling Settlement Payment Rights For You?

The major advantage of a structured settlement is that it provides substantial security and financial independence. A structured settlement ensures that the settlement award will be available for the plaintiff and/or his or her family, often for a lifetime.

Some reasons to cash in on your structured settlement or annuity:

· Pay medical bills

· Pay down high-interest debts

· Pay for college education

· Make a down payment on a home

· Purchase a car

· Start a business

· Invest for retirement

What Are the Benefits of Selling Your Structured Settlement?

If you’re in need of immediate cash at some point down the road, you may consider wanting to sell your structured settlement fund and take all the proceeds at once.

With a lump-sum payout, you get all the money you need upfront, so you don’t have to wait to start paying down debts or balance your finances. If you need money now, cashing out may make sense.

The main benefit of selling your structured settlement is liquidity.

Do you need immediate medical care and have limited or no insurance? Are you facing foreclosure? Is credit card debt ruining your life? Are student loans stressing you out? The list of financial hardships is long, and sometimes people must make the decision between their future security and their immediate needs.

The Pros and Cons of Selling Settlements Payments

Advantages:

· Get a lump sum instead of small amounts over the course of months or years.

· Use the cash for your financial goals, like buying a house, paying off debt, or making a major purchase.

Disadvantages:

· Companies that buy payment streams on the secondary market apply a discount rate and fees, which lowers the amount they offer.

· The sale process takes time, often between one and three months.

Sale options: Full versus Partial

If you decide to sell your lawsuit settlement, you are not required to sell all payments at once. Instead, you can sell your settlement in part or in full based on your financial needs.

Many people decide to sell only a specific number of their future payments so they will resume receiving payments in the future. You can also sell a portion of your payments, so you continue to receive partial monthly payments and also get a lump sum. Lastly, you can sell the entire structured settlement annuity and receive a larger lump sum.

Keep in mind that each sale comes with fixed costs, so it can cost more money to sell portions of your annuity multiple times.

Know These Structured Settlements Basic Before Selling

What is a structured settlement?

A structured settlement is an alternative to a lump sum payment awarded by the court following a lawsuit. They are awarded to personal injury victims over a long period of time.

Allowed by the US Congress since 1982, a structured settlement is a completely voluntary agreement between the injured victim and the defendant. Under a structured settlement, an injured victim doesn’t receive compensation for his or her injuries in one lump sum.

Instead of receiving money upfront, you receive a series of payments over time if you select a structured settlement. This is guaranteed income over time. Instead of facing unexpected stress and management issues that come with receiving a lump sum of money, the recipient is protected from unfortunate circumstances that could result in spending a large portion of the money that he or she needs to manage a lifetime of injury-related expenses.

What is the difference between an annuity and a structured settlement?

Structured settlements are created due to a personal injury award or a settlement agreement in a personal injury claim. Defendants can self-fund a structured settlement or purchase an annuity that provides ongoing payments to a plaintiff.

Regular annuities, on the other hand, can be purchased by individuals from insurance companies even if there is no legal claim. They provide regular payments that can be useful in retirement planning.

A structured settlement follows a court process, and it is a stream of payments determined through negotiations between a plaintiff and a defendant. An annuity is a financial product that guarantees regular payments over time from an insurance company.

What are examples of a structured settlement?

Structured settlements can be available in any type of legal case where a plaintiff is awarded damages by a defendant. Some of the different types of cases where a structured settlement may be appropriate include:

· Personal injury

· Medical malpractice

· Workers’ compensation

· Discrimination

· Vaccine injury

· Large-scale group sexual abuse/molestation

· Wrongful death

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Gain the Financial Flexibility You Need

Selling your future payments can better prepare you for whatever financial situation comes up in your life.

Sell Your Payments Today

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Is a structured settlement a good idea?

Is it better to choose a lump sum over a structured settlement?

By selling all or a direct portion of your settlement you can get a lump sum of cash that can not only allow you to address financial hardships but also give you peace of mind.

Do I pay taxes on structured settlements?

Structured settlement payments—including growth—are 100% income tax-free. Structured settlement annuities are not taxable — they’re completely tax-exempt. The tax-exempt nature of structured settlement annuities results in significant tax savings for the client. But if you invest that money and earn interest, that interest earned is taxable.

What are payout options for structured settlements?

Structured settlements can be arranged in different ways. The right type of structured settlement will depend on the reason for the settlement, the extent of damage suffered, and the way the funds will be used.

Common arrangements for structured settlements payment schedules:

Large initial payment followed by smaller periodic payments: If accident victims have accrued substantial expenses, such as large medical bills, they may arrange a structured settlement with a large lump sum payment up front and then smaller periodic payments later.

Increasing payments: Some structured settlements will start out with smaller payments and the amount of money paid out will increase over time.

Decreasing payments: Other structured settlements will do the reverse, starting out larger and then reducing in amount as needs decrease over time.

Delayed payments: Sometimes, plaintiffs will want to defer the receipt of settlement money until later in life. This enables payments to start at a designated time.

Additional payouts for extraordinary expenses: In some cases, a structured settlement will pay out a specific amount of money on a set schedule but will allow for additional payments to be made to cover unusual expenses.

Can I Sell My Structured Settlement?

The terms of your settlement and the laws in your state will determine whether you can sell your payments. State laws that fall under the Structured Settlement Protection Acts are intended to protect settlement recipients from unethical structured settlement buyers. Your protection and financial security are also reasons that you will get a court date at which your sale must be approved by a judge.

All structured settlement sales require a judge’s approval. The court-approval process takes roughly 45 to 60 days.

The judge will consider the terms of the sale and how the sale will affect your long-term financial situation, including the likelihood that you will suffer financial hardship without regular payments from your structured settlement.

The judge may consider the following:

· Your living expenses, including expected medical expenses.

· Your ability to earn money.

· Your future financial obligations, such as college tuition.

· Your life expectancy.

Can I sell a minor’s structured settlement?

The most carefully guarded structured settlements are those for minors. If a child under of the age of 18 received a structured settlement in a personal injury case and his or her circumstances have changed profoundly since the settlement was ordered, a parent or legal guardian can sell the right to future payments. Keep in mind that the burden of proof is high.

Parents or guardians must demonstrate conclusively to the court that there is an immediate need for cash and that the child would be better served by selling the settlement than by receiving future payments.

Some companies won’t buy structured settlement payments intended to provide for minors.

How Do I Cash Out a Structured Settlement?

Evaluate your needs and decide how much money you need and how much of your structured settlement you want to sell.

· Contact companies that buy structured settlements – You will do best if it is important that you work with a structured settlement buyer that is reputable and has your best interests in mind, makes you feel comfortable, is experienced in completing the court ordered transfer process, et al.

· Choose the company that you like best and that provides the best offer – It’s time for paperwork. After you submit the proper paperwork (your annuity policy, settlement agreement or benefit’s letter so the transfer company can verify your payments, application, ID), all materials are reviewed to ensure they are complete and accurate.

A Guideline to Selling Your Structured Settlement:

1. Decide how much money you need and how much of your structured settlement you want to sell. Consider the amount of money you are willing to sacrifice and for how long.

2. Assess your options and get quotes. Armed with this knowledge, you may want to revisit step one.

3. Select the company. Investigate the factoring companies until you’re satisfied that they’re reputable. Review their websites, talk to their representatives and look at the professional organizations to which they belong. Once you’ve done all your homework, decide which one works best for you.

4. Choose the best offer and complete and sign the paperwork. The required paperwork includes: Two forms of identification, a completed application, a copy of the original structured settlement and release agreement, a copy of your annuity policy. Once this step is completed, you’ve officially agreed to sell your payments.

5. Request an advance. If you need money immediately, ask for a cash advance. This will be a partial payment of about $1,000 to hold you over until the process is complete. It can take up to three months to receive your lump sum payment.

6. Appear before a judge. The factoring company you’re working with will make all the arrangements and prepare the paperwork for you to appear before a judge in your county. You will answer some questions to assure the judge that this transaction is in your best interest. This step is required by law. Among other things, the judge will consider the welfare and support of your dependents when deciding whether to approve the sale.

7. Get approved. After the court approves the transaction, you will send a copy of the order to the administrator of your structured settlement.

8. Get your money. Receive full payment, as specified in your agreement with the factoring company. This will typically happen within three to five business days of the court’s approval. If you owe any past-due child support or have any tax liens, they will be subtracted from your lump sum before you can receive the money.

How long does it take to sell a structured settlement?

The timeline from when you request a quote from a funding company to the time you receive payment from the sale can span anywhere from 45-90 days.

Every structured settlement purchase transaction is different due to each state’s laws regulating such purchase transactions. In addition, you may qualify for an immediate cash advance to help you through a particularly tough time.

How much money will I receive If I sell my structured settlement?

Your structured settlement is technically worth the present value of your contract.

This is NOT the amount you will receive if you sell your payments.

The factoring company will calculate the present value using a formula that takes the future value of your payments. This is because the company will not receive the money until some date in the future and has to subtract the growth potential the company will lose by not having the money in hand to invest immediately.

With this formula, the company calculates the “discount rate.” The discount rate is the percentage factoring companies charge to account for the inherent risk associated with money that they will receive in the future. The discount rate typically falls between 9% and 18%.

In addition to the present value of your settlement, the factoring company considers the number of payments you’re selling, the dates of your payments, current market rates and economic conditions, and any service fees associated with the transaction to arrive at your discount rate.

You can get an estimate from a structured settlement calculator but understand that no calculator can account for the detailed terms of your contract. Use the estimate as a starting point and expect quotes to vary among purchasing companies.

If you are able, It is a good idea to speak with an attorney, or financial advisor, before making a financial decision to sell structured settlement payment rights.

How much cash will a company take to help me sell my structured settlement?

The percentage structured settlement companies take is based upon the discount rate applied to the transaction and negotiation.

If you are considering selling your structured settlement payment rights, you need to be sure that the offers you are getting are reasonable and fair as you’ll have to get the lump sum reduced by a factor of the projected interest earnings, known as the discount rate.

The exact discount rate that you will need to give in order to sell your structured settlement will depend on a number of factors:

· the total amount of your settlement payments,

· the number of payments you have remaining,

· the date those payments are due to arrive, and

· the number of payments you wish to sell, etc. The longer people have to wait to receive their payments, the greater the discount rate will need to be.

Will I be charged an interest rate if I sell my payments?

Factoring companies charge a discount rate on the sale of structured settlement payments. Average discount rates range from around 9% to 20% and are intended to offset the risk assumed by the purchaser in the transaction.

Discount rates from settlement buyers to consumers can range anywhere from 8% to over 18% but usually average somewhere in the middle. An average discount rate of 12% is reasonable for the secondary market but some companies may want to take as much as 30% discount.