What is a structured settlement?
A structured settlement is a financial or insurance arrangement of fixed payments at fixed intervals. Structured settlements are often set up after a claimant is awarded large monetary damages payable in small portions over time.
Can I sell my structured settlement payments and get cash now?
Most agreements creating structured settlements state that you cannot sell or assign your structured settlement payments. Even with these terms, you can sell your payments if you follow the procedures set by federal and state law. Generally, you will have to get a local court to "approve" your transaction. A simple phone call to a structured settlement lump sum provider will help clarify the situation for you.
How much money can I receive for my structured settlement?
The amount of money you receive for your structured settlement will depend on several factors:
- The total amount of your settlement payments
- The number of payments you have remaining
- The date those payments are due to arrive
- The number of payments you wish to sell
- Interest rates and other financial considerations
The amount of money you can receive for your settlement payments varies on an individual basis. To find out exactly how much money you can receive, company that specializes in lump sum cash options.
Why would I sell some or all of my structured settlement payments?
Structured settlements are created for many different reasons. Sometimes, payments are set up to make sure the recipient has a reliable source of income, other times it is guarantee that medical bills are able to be paid.
From time to time, the financial situation of structured settlement recipients change - sometimes dramatically - and the money that is needed is simply out of reach. The lump sum option makes this money available quickly.
Am I required to sell all of my payments?
No, in fact most structured settlement recipients sell only a portion of their payments so they can raise money quickly, but still have the financial security of incoming payments.
How soon can I can I receive the lump sum cash payout?
Once you decide on the lump sum option, it can take 4 to 12 weeks to receive your money.
What does the "time value of money mean"?
The present value of money today is worth more than the same amount of money in the future. The two primary reasons for this are:
- Money today can be invested safely in an interest bearing account that would increase its value over time making it worth more than the same amount paid in the future.
- Inflation can reduce the value of money paid at a future date. What was the cost of a gallon of gas cost 20 years ago? How much will it cost 20 years from now?
If the dollar amount stays the same, over time, it buys less. That's why money today is more valuable than money in the future.
How does the "time value of money" effect selling my settlement?
If a structured settlement recipient were to sell future payments for cash, the closer payments are worth more than the payments further out.
For example:
You will get more money for the next 5 years of payments, then you would for the last 5 years of payments. This is because you can buy more with money today than you can buy in the future.
In addition, having access to the cash today would enable you to invest the money, earning interest to further increase its value over time.
Do I need to go to court?
All transactions must be approved by a court, but whether you need to attend the hearing depends on the state you reside in and the specifics of your settlement agreement. Contact a structured settlement lump sum provider to find out for sure.
Will I have to pay taxes if I sell my settlement?
This depends on your structured settlement. If your structured settlement payments are not taxed, then your lump sum payment would also not be taxed and vice versa.
Because every person's tax situation is different and lump sum companies cannot provide tax advice, it is recommended that you consult your own financial and tax advisor before selling any of your settlement payments.
