Many of us are still searching for liquidities and cash these days despite the improvements being made by the economy. Recently, it has become much more common for people to sell their ongoing payments, such as annuities and structured settlements. So, it is possible to sell your structured settlement to get a lump sum. This article will cover how to sell and if you should.
A claimant is issued a structured settlement with monthly payments as a results of settling a lawsuit, winning a court case, or winning the lottery. Sometimes, though, once you are already in one of these settlements, your only option may be to cash out. You may require a lump sum to help pay for a house down payment or a new car.
Before converting a structured settlement annuity into cash, there are significant factors you need to consider first. Not all of the companies that are willing to purchase structured settlements are reputable. There are a lot of companies looking to make money off of your structured settlement, but you need to find one with the skills and expertise to have the sale approved by the court system.
Reasons People Try to Sell a Structured Settlement
Individuals choose to sell annuities for a variety of reasons. There are a many factors that force people to convert structured settlements into cash. These include:
- Taking advantage of a unique opportunity
- An increase in monthly expenses since the settlement was first structured
- Meeting a big financial obligation
- Paying down extensive medical bills
- Obtaining funding to send their child to college
In addition, some have sought to sell their structured settlement because they want to buy a home or pay down a mortgage, or they are stuck in an unexpected financial situation.
How Structured Settlements Are Sold
To have your structured settlement liquidated and converted into cash, there are specific requirements that must be met. For a percentage of the total remaining payments, a beneficiary can elect to sell off their structured settlement and get a lump sum payout. Essentially, you are paying a premium to get all of your money now.
Another way in which structured settlements are sold is by just selling off a partial amount of the remaining payments. Monthly and yearly installment payments will continue to arrive with this option. But, the remaining payments will be great reduced due to the lump sum payment. And again, this payment will only be a fraction of what you would have received if you had not sold.
No matter how you go about getting a lump sum after the structured settlement, you will need to get approval from the court system. This can be tricky. You and the buyer have to prove to the judge that the sale is in your best interest and that there is a financial need. Needing to buy a car or a house are unlikely to be good enough excuses for selling.
Since the process is tricky, be sure to do your research before considering selling your structured settlement. Often times, you are better off keeping it.