When it comes to making the decision to sell or not sell your future structured settlement payments, there are many pros and cons to consider. Selling all or part of your structured settlement may be the best way to get a lump sum of money for an unexpected expense, such as a large medical bill or an urgent home renovation. People sometimes refer to this transaction as a structured settlement loan. Whatever the reason, it is important to weigh the advantages and disadvantages before making a decision.
The advice you will hear about selling a structured settlement ranges from “hell no” to “absolutely”. It really depends on your individual case. However, one thing is certain: you will always lose money when you sell a deal. Structured settlement annuities are great options in personal injury cases because they are tax-free and guarantee income over time.
But, structured settlement agreements are final and do not allow for unplanned changes. In these cases, many structured settlement beneficiaries choose to sell part or all of their annuity in exchange for a large lump sum of cash. Accepting a Structured Agreement eliminates control and flexibility. If a sudden financial need arises, the person cannot get an increased payment or sell the structure. People in these situations are at the mercy of companies (factoring companies) that use cash to buy structured settlements.
Selling a structured settlement allows you to transform that constant monthly payment flow over several years into a lump sum of cash. Paying your college tuition upfront, without a loan, or canceling your college loans, are valid reasons to sell your structured settlement in cash. If a child under the age of 18 received a structured settlement in a personal injury case and their circumstances have changed profoundly since the settlement was ordered, a parent or legal guardian can sell the right to future payments, but the burden of proof is high. A note from your doctor detailing your current health conditions can also show a judge that you must sell your structured settlement payments so you don't default on your college loan. When it comes time to sell these payments, forty-eight states and the federal government have enacted additional consumer protection laws that set strict conditions when an annuity beneficiary sells some or all of their future payments. A trusted structured settlement company can analyze your needs and offer you the right solution for your financial objectives.
Even though the structured agreement is theirs, judges are required to ensure that the payments sold benefit you in the short and long term. Regardless of the circumstances or nature of the structured settlement, the transaction must be reviewed and approved by a judge in a court of law. People with traumatic brain injury who receive structured settlement payments can be easy prey for these factoring companies. Payments were guaranteed, the person receiving future payments could not spend the entire proceeds of the liquidation, did not have to worry about managing, investing or monitoring large amounts of cash, and did not pay income taxes. When it comes to selling these payments, there is one thing that is certain: you will always lose money when you sell a deal. The discount rate is essentially a commission charged by the factoring company that reduces the value of the structured settlement annuity it sells.
A factoring company, such as CBC Settlement Funding, will provide cash to the annuity beneficiary or payee today in exchange for a certain amount of future payments. Whether you are buying or selling a structured settlement payment, every settlement sale requires a notary who is there when you need it. Ultimately, it is up to you whether or not you decide to sell your structured settlement payment rights. There may be other benefits or drawbacks that are unique to your specific situation.