"Once you understand the financial implications of selling your structured settlement, you'll need to contact an attorney to verify its legality. Most states have passed laws severely restricting the sale or transfer of settlements to a third party."

Sell my Structured Settlement Payments

Though structured settlements can provide enormous benefits, some people may want to sell their structured settlement payments for cash. If you're asking yourself: Should I sell my structured settlement payments? Perhaps you can relate to this scenario: A 46-year-old single mother of two is hit by a delivery truck while crossing the street. Though her injuries are not life-threatening, they do put her out of work for a significant amount of time, and her medical bills are substantial. She files a lawsuit against the delivery company and, fortunately for her, is awarded a judgment of $500,000. However, the judgment is awarded in the form of a structured settlement. Instead of receiving the money in a single lump sum, our single mother of two will receive $30,000 per year over the course of 20 years.

With a steady stream of income coming in over the next two decades, it may seem like our single mother is financially secure. But consider this: Her oldest child is leaving for college and the other needs braces. On top of that, her roof requires urgent repairs. That yearly $30,000 is nice, but not nearly enough to pay these bills on top of living expenses. Fortunately for our single mother, many companies are willing to pay her a lump sum for the rights to her future payments.

Sounds like a good solution, doesn't it? Why bother with structured settlements at all when you can get a lump sum right now? But before you rush to sell your settlement to the highest bidder, there are other things to consider.

Cash for Structured Settlement Plan

Before even beginning the sale process, you need to understand a few things. First and foremost, the money you get from the sale will be substantially lower than the sum of your judgment. Because settlement companies are in business to make money, they are going to give you less than they expect to make on your future payments. However, do bear in mind this is understandable since you will now have the benefit of earning interest on the money. A trusted financial adviser should be able to help you better understand the pros and cons of giving up future payments for money right now.

Tempting as it may be to want a lump sum, it can be spent very quickly and therefore leaving you with what could be a long life time with little income. Consider carefully your financial habits (how responsible you are), including perhaps unwarranted money demands from other members of your family before relinquishing the security and peace of mind of income for a one time only large payment.

You may find that with better monthly planning and budgeting you won't need to sell some or all of your monthly payments for cash. The Computer Support Group offers a monthly budget calculator to help you make your decision. However, to accurately create a budget you will need to account for all of assets, liabilities, tax issues and other budget concerns. The table below offers a list of common financial areas you should consider.

Also, obtain written advice concerning the tax implications of exchanging your monthly payments for a lump sum.

Once you understand the financial implications of selling your structured settlement, you'll need to contact an attorney to verify its legality. Most states have passed laws severely restricting the sale or transfer of settlements to a third party. In some cases, the original terms of the settlement may prohibit you from selling future payments at all.

Furthermore, because structured settlements are court-ordered legal documents, any sale or transfer of a settlement will need to go through a court. At the same time, the sale of your settlement may affect the tax-free status of your judgment. In all of these instances, a competent attorney will be able to assist you with preparations for a structured settlement sale.

Your next step will be to find a buyer for your settlement. There are hundreds of companies that specialize in buying structured settlements and future annuity payments. Refer to our articles on finding a buyer and comparing structured settlement companies for more tips on this step.

Once you find a buyer and have come to an agreement with them, you must return to court for an order allowing the sale. Again, it is important to have the assistance of a trusted attorney and financial advisor throughout the process - you can never be too safe when it comes to your financial future.

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For more answers to the question of how to sell my structured settlement payments, including a handy list of structured settlement transfer facts and myths, keep reading.

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