How to Sell Your Structured Settlement Payments the Right Way: Key Considerations

Last Updated on December 5, 2020

It’s true that once you agree to the terms of a structured settlement you won’t be able to change them, but if you later decide that they don’t meet your needs, you can sell your structured settlement payments. Although you must first obtain court approval, you have the legal right to sell your payments, in part or in whole, to a reputable buying company.

Common Reasons for Selling Structured Settlement Payments

Selling some or all of your future structured settlement payments may be the best way for you to get a lump sum of money for an unforeseen expense. Most people start the selling process with a specific need in mind. With money in your bank account, you finally have the resources to tackle various financial dilemmas such as;

  • Make a major life purchase (house, car or business)
  • Pay off credit-card debt and improve their credit score
  • Pay off medical bills
  • Finance a college education or pay student loans
  • Pay for a funeral

Know that how you spend this money now will affect your future financial well-being. The best solutions are those that ensure that the sacrifice you make – giving up long-term income in exchange for money now will pay off.

How to Sell Your Structured Settlement Payments the Right Way: Key Considerations

1. Determine the Amount of Cash You Need

Decide how much money you need and how much of your structured settlement you want to sell. Keep in mind that the total amount of the payments you would receive over time will be higher than the amount you will get from a company that purchases the rights to the payments. That’s because the company will have administrative and legal costs. The company also exists to make a profit.

With that in mind, consider the amount of money you are willing to sacrifice and for how long. Most people don’t sell their entire structured settlement. They instead sell a portion of their payments. They might decide to sell six months’ worth of payments, leaving them with no regular income stream from their structured settlement during that time period.

Or they might want to continue to receive regularly scheduled payments during those six months, so they may sell half of their payments for a year. The percentage and length of time are up to you. You should carefully evaluate your financial situation and consider what would be best for you.

Make sure you sell enough payments for whatever debt you need to cover. 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 happens, the judge may doubt your ability to handle your finances and may be less willing to approve the second transaction.

2. Get a Quote from a Purchasing Company 

Contact the company that will make the purchase, known as a factoring company, for a quote. This will tell you how much the company will pay for your payments. It is often helpful to get more than one quote from different purchasing companies to be sure that you have chosen the right factoring company. By contacting companies and getting a quote, you will have a better understanding of how much money you can get for your payments.

It’s recommend that you check out the ratings for the companies from Better Business Bureau

3. Select the Company

Read the fine print and know the terms of any deal before agreeing to it. Make sure all your questions are answered and that you are comfortable working with the company of your choice. If you are unsure, ask someone you trust to help you weigh your options. Feel free to ask more questions.

Review their websites, talk to their representatives and look at the professional organizations to which they belong. Once you’ve done all your homework, decide which one works best for you. Choose the best offer, complete and sign the paperwork.

4. Get Court Approval

Sounds intimidating? Don’t worry. The factoring company you work with will take all necessary steps and prepare the paperwork for you to appear before a judge in your state. You will answer a few questions to reassure the judge that this deal is in your best interest. This step is required by law. Among other things, the judge will consider the welfare and support of your dependents when deciding whether to approve the sale. After the court approves the transaction, you will send a copy of the order to the administrator of your structured settlement.

5. Receive Your Money

Receive full payment as specified in your agreement with the factoring company. This usually happens within three to five business days of court approval. If you owe any past-due child support or if you have tax liens, they will be subtracted from your lump sum before you can receive the money.

IMPORTANT: If you are considering selling your structured settlement payments, we recommend that you seek the assistance of a trusted lawyer or financial advisor with experience in the structured settlement secondary market. They will help you find a credible factoring company with a history of protecting the long-term interests of their clients.

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