Selling all or a portion of your own future structured settlement payments may be the best way that you should acquire a lump sum of money for an unexpected expense, such as a large medical bill or urgent home renovations.
Sometimes people refer to this transaction as a structured settlement loan. But that phrase is actually inaccurate as you cannot find any such thing as a structured settlement loan. Current laws prohibit set up settlements from being utilized as collateral for loans.
Evaluate Your Needs
Step 1: Decide how much money you need and how a lot of your structured settlement you want to market. Keep in mind that the overall dollar amount of the payments you would receive as time passes will be higher than the amount you will get from a company that purchases the rights to the payments. That’s because the organization will have administrative and legal costs. The company also exists to have a profit.
The lump sum you receive from the buyer, or factoring company, is often as low as 50 percent of your total future payments, but typically will be between 60 and 80 percent. If you get $1,000 monthly through your structured settlement, you may sell each payment for anywhere from $500 to $800.
With that in mind, consider the amount of money you are willing to sacrifice as well as for how long. Most people don’t sell their entire structured settlement. They instead sell some of the payments. They might decide to sell six months’ worth of payments, leaving them with no regular income stream off their set up settlement throughout that time period.
Or they might want to continue to receive regularly scheduled payments during those half a year, so they might sell half of their payments for annually.
The percentage and length of time are your choice. You should carefully evaluate your finances and consider what would be right for you.
Using the example of $1,000 monthly payments, you can elect to market six months of the payments, or $6,000. If so, you wouldn’t receive anything from your structured settlement for those half a year. Following that time was up, you would again get started getting $1,000 per month. That arrangement could bring a lump sum of between $3,000 to $4,800, with regards to the offer.
If you elected to sell half of your repayments for the next year, the dollar amount would still be $6,000, but, in this scenario, you would receive payments of $500 a month – rather than $1,000 – for a year. Following the six months, you would resume your monthly $1,000 income.
The legal requirements of sell structured annuity payment may delay the buyer’s receipt of the amount of money, which may impact the final offer.
Make sure you sell enough payments for whatever debt you will need for. If you sell too little, you’ll have to start the process all over again and appear before a judge a second time to get additional funds. If that occurs, the judge may doubt your ability to take care of your finances and may be less willing to approve the next transaction.
You are guaranteed to receive money to pay expenses over an extended time period
Ongoing support for long-term needs
You are protected from the consequences of bad investments
You have less pressure to give the money away
Structured Settlement Cases
According to the National Structured Settlements Trade Association, Structured Settlements are more likely to be found in cases involving more dangerous personal injury. The association says structured settlements are ideally fitted to cases involving:
Guardianship that may involve minors or adults deemed incompetent
Wrongful death cases the surviving members of the family need income
Severe injury, particularly with long-term health care requirements, bills and family support