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If you've ever found yourself the victim of an accident, you know that it can take a while to get your feet back on the ground. The financial part of it can be even worse. You may win a protracted legal battle and get some compensation for your troubles but even that could get tied up in the system. You win a settlement and have medical bills that need to be paid but you're struggling to even get access to the money.

If you're holding a structured settlement that consists of a stream of periodic smaller payments and are seeking a lump sum up front to help pay for things like current medical expenses there are companies out there that will purchase your structured settlement and turn that series of payments into an upfront lump sum payment for you.

Before deciding whether or not selling your structured settlement for a lump sum makes sense, you have to keep in mind that in most cases the transaction makes sense only for the company who's buying the settlement. Firms that buy settlements typically offer about half of the value of the settlement in exchange for the ongoing payment stream. Even considering the transaction over time, the company comes out ahead because they're taking in much more than they're paying out in a lump sum. And it's essentially risk-free for the company as the settlement is backed by a court order.

If you're considering selling your structured settlement for cash, there are a few things you should know first.

First, you should always shop around. Big companies like J.G. Wentworth can be a good starting point but you should try to research and get quotes from at least three different companies. The offers you'll see can vary significantly so make sure you judge each on its total merit.

Second, you'll want to consult with a tax advisor or attorney. You may find that the lump sum payment you receive could be taxable leaving you coming out even further behind so a consultation with a qualified tax specialist would be advisable.

Third, make sure that you have no other options. Individuals selling their settlements often give up a large amount of their agreement in order to receive the lump sum payment up front.

Selling a structured settlement can work out for a select group of people but you should proceed with great caution. You should do your research and make sure you understand all pros and cons involved before proceeding with this type of transaction.

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Herminia Hayes

Lvl 13
3y ago

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