How to sell structured settlement payments
What is a structured settlement?
Many civil lawsuits result in someone or some company paying money to another to right a wrong. Those responsible for the wrong may agree to the settlement on their own, or they may be forced to pay the money when they lose the case in court.
Structured settlements are meant to provide long-term financial security to the injured party.
Can i sell my structured settlement?
Sure, you can! You can sell your structured settlement to a factoring company for immediate cash. You must obtain court approval, but you have the right to sell your payments, in part or in full. You may also be able to sell survivor benefits.
Before deciding to sell your structured settlement, we recommend you to ask for the help of a trusted attorney or financial advisor. They will help you find a credible factoring company with a history of protecting the long-term interests of its clients.
State laws that fall under the Structured Settlement Protection Acts are intended to protect settlement recipients from unethical structured settlement buyers. Your protection is also the reason you must have your sale approved by a judge.
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 the regular payments from your structured settlement.
Pay attention: the sale could potentially affect your retirement plans, your eligibility for Social Security or other government assistance programs, and your tax obligations.
How much will i get?
You won't receive the same amount of money you'll get if you keep your structured settlements. Why? The factory company will calculate the present value using a formula that takes the future value of your payments (that's because they won't receive the money until some date in the future) and subtracts the growth potential the company will lose by not having the money in hand to invest immediately. That's how the company will calculate the "discount rate", typically between 9 and 20 percent.