Thinking On When To Sell A Structured Settlement Payment And Then Accomplishing A Sale

Today, There are many people who are the recipients of structured settlements as a result of a financial arrangement reached after a personal injury lawsuit or some other sort of legal action. As a financial arrangement that includes the payment of money over a set period of time, structured settlements have grown in popularity in this country over the last few decades.

Usually, most every lawsuit settled or decided upon by a jury features a structured settlement rather than the payment of a lump sum which, prior to the 1970s, was the most common way of paying off in a lawsuit that involved personal injury or other torts. They are distinguished by the fact that money is paid on an installment basis over a length of time, with recipients living off the payments.

There are times, however, when it can make a fair bit of sense to look at the structured settlement payment and perhaps sell off a portion of it in order to raise ready cash. This may be because certain emergencies or other obligations involving finances has arisen. Laws vary by state, but most do allow for such payments to be sold in order to meet a range of obligations.

Think of the sale of such a payment to be like having a bird in the hand rather than waiting to try to capture two birds in the bush. Ready cash can be obtained up front rather than having to sit back and wait for money that is going to be paid out on an annual or some other sort of basis. Additionally, federal law generally doesn’t require the payment of any tax on such a sale.

This last feature can make for a powerful argument when it comes to trying to decide whether selling a portion of a structured settlement can make sense. In fact, it is a powerful incentive in many cases. Usually, sales of such settlements start in the low thousands of dollars and can run more than $1 million in many cases. Any sale price quotes will depend on how much of the payment is going to be sold.

For one, always make sure the institution or funding source that will be buying a portion of the payment is reputable and can be researched before agreeing to make a commitment to sell the settlement payment. At a minimum, the funding source should be insured, licensed to conduct such financial transactions and also have a bond guaranteeing that it can meet financial obligations.

Keep in mind, also, that the sale of a structured settlement is usually at a discounted rate that is negotiated between the holder of the settlement and the institution buying the settlement. Discount rates vary by negotiation, so be prepared for a little bit of give and take. In some states, the holder of the structured payment must meet with a judge who must sign off on any deal reached.

Certainly, there are occasions when it can sometimes make sense to sell a structured settlement payment, so take care to find a good funding source, first of all. Check the quote over carefully and decide if the amount offered will be sufficient. Once all steps between the two parties have been completed, it usually takes around 90 days before final payment can be made, so keep that in mind.

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Category: Finance