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How to Make Sure You Can Successfully Sell Structured Settlement Payments

People who have been injured or won a lawsuit may have a structured settlement contract. This means that they are entitled to receive a number of payments spread out over a certain number of years as a part of the lawsuit they won.

Sometimes people will take these payments and trade them in to a company that will give them a lump sum in exchange for what they would have made over the years had they kept their original payment schedule.

People may do this in order to pay off debts they owe, put a down payment on a house, start investing, or maybe this could be the one chance you get to send your kids or grandkids to college.

Because this process has been getting easier these past decades you may hear about companies offering their services while watching a commercial on TV or on the radio.

Let's look at the steps that you will need to take in order to get the best lump sum payout.

1) Research the Facts: Know the ins and outs of your lump sum payment. This money you will eventually receive is not going to be an overnight deal.

Sometimes it could take three or four months because of all the red tape involved in the process.

a. A recent law passed in 2002 states that most of these companies who have clients that want to cash out their settlements need to take each case through the court system in order to protect the consumer.

b. Unless you choose to reinvest your lump sum of money most of these payments will not be charged as taxable income, but make sure you check with your accountant to know if this applies to you.

c. The settlement payments over the life of the contract will probably be significantly more than what you can cash out the annuity for, but keep in mind a dollar today is worth more than a dollar tomorrow when you factor in inflation.

For example you could be receiving payments monthly of $1500 which brings your total for about 10 years to $150,000.

A couple of settlement companies you are working with offers you roughly around $87,000 give or take some fees they can legally tack on to the deal.

Your settlement originally was to end in 10 years so all those factors need to come into play before making a final decision about cashing out.

2) Do the Math: As you can see in the example above you are going to lose money in the end because these companies that are going to buy your structured settlement are in the business of making money.

Yes they will offer you what they think the settlement is worth now, but the payment may only cover a number of the years that you would have received in payments.

The bigger picture is that you will have the liquidity you may need for your current situation.

Also remember structured settlement calculators are available on the internet which may give you a clearer picture of your lump sum possibilities and the present value of your annuity.

3) Seek Advice from an Attorney: You might already have someone in mind to be your lawyer because in order to get the structured settlement payments you probably had to be represented in court by counsel.

This is another perfect time to use a lawyer to make sure you are getting the most out of your lump sum.

As I mentioned before different companies will have varying amounts they think your settlement is currently worth, but a lawyer might be able to tell the difference between deals based on the terms of the agreement as well.

4) Compare Structured Settlement Companies: The best place to start checking into the background of any company you are considering would be to look on the Better Business Bureau website.

At the BBB website you can look for any complaints filed against them or if they are in trouble with any regulatory agencies.

Any company engaged in these kind of activities should already be registered and if they are not you might want to consider it a red flag and look to do business elsewhere.

The other way to use the BBB website is to begin your research there by typing in settlement funding along with the state you reside in.

Also remember that part of your research into these companies should also include their ability to completely respond to all of your concerns and questions, as well as, offering you a top notch payout for your settlement.

Whatever your situation is currently selling your structured settlement payment could be in your future. Just make sure you do your research and understand what deal you are getting so you make an informed decision. You will probably want to consult an attorney and the Better Business Bureau before signing your name on the dotted line.