Thinking about selling some or all of your future structured settlement payments and getting cash for structured settlement? This is an important decision. After all, you may have thought long and hard about accepting the settlement. For this reason, selling some or all of your settlement payments may provoke questions and concerns.
One thing you can do to ensure you make the best possible decision is to get prepared before you start the process. To help, we developed the following checklist of factors to consider when selling some or all of your structured settlement payments.
1. What features do my settlement payments have? Structured settlements often have more features than their recipients realize. Your settlement may contain cost of living adjustments, lump sump payments on special anniversary dates or birthdays, or contain non-guaranteed payments after a certain date. By reviewing your settlement and understanding its unique features, you will be in a better position to explore options.
2. What are your precise cash needs? Remember, your structured settlement is a valuable asset. Like any important asset, care needs to be taken when considering selling some or all of it. The most important step you can take in this regard is to determine as accurately as possible how much cash you currently need. By doing this ahead of time, you establish an important goal which will help you sort through the several options you may be presented.
3. What role do settlement payments play in your monthly budget? It’s important that you sell only the portion of your regular payment that you can afford to part with. If you are selling more than you can afford to part with each month, make sure you have a plan for funding the difference either temporarily from the proceeds or from some other source.
4. How will you spend the proceeds from selling payments? Selling your structured settlement payments is a legal transaction. As a result, your plan for spending the money will be reviewed in court to ensure the sale of payments is in the best interest of you and your dependents. Having a good plan for spending the funds will make the court process easier and quicker.
5. Can I develop a flexible plan that is customized to accommodate my unique needs for cash? Remember, the payments you receive are your asset and you should be able to sell them in any manner that suits your needs. As a first step, it’s often best to determine how much cash you need, then figure out the combination of payments to sell to get that amount of cash. For instance, you might sell all of your regular payments for several months or years and then resume getting them at some point in the future. Or perhaps it would be more advantageous to sell just half of the payment you get now so that you receive a lump sum but also continue to receive some of your regular payment.
6. Where are my structured settlement documents? You can start the process of selling some or all of your settlement payments with just the name of the insurance company. However, to complete your transaction, you will need to produce documentation about your settlement including the settlement agreement and related insurance company annuity. Having these documents handy will speed your transaction.
7. What other assets do I have at my disposal? The right to receive payments now and in the future is a financial asset just like stocks, bonds, mutual funds, real estate and other financial instruments. As a result, if you need cash today, you should consider not just the sale of some or all of your structured settlement payments, but other assets as well. Some factors to consider when evaluating your assets include ease of sale, potential gain or loss associated with the sale and the impact on other owners of the asset if it is jointly held.
8. What is the precise timing of when I need cash? Structured settlement payments arrive at pre-established intervals. These intervals may or may not match the liabilities you face such as tuition payments, medical expenses or the need for home improvements. If they do not, this mismatch could cause disruption in your personal finances in terms of late or missed payments, calls from collection agencies and or a deterioration of your credit score. In instances such as these, the sale of some or all of your structured settlement payments may be advantageous because it better matches your receipt of cash with your needs.
9. Is the company buying my payments reputable? When you sell several months or years of payments, you are entering into a long term relationship with the company that is buying them. Because of this you want to make sure the company is reputable. As a first step, check their Better Business Bureau rating. The Better Business Bureau assigns grades from A to F with pluses and minuses. The highest grade is A+. The grade represents the Bureau’s degree of confidence that the business is operating in a trustworthy manner and will make a good faith effort to resolve any customer concerns filed with them.
Selling some or all of your structured settlement payments may be a good idea. It’s important to keep in mind that your settlement was carefully developed to provide you with future income. Therefore any change to this plan must be considered with equal care. A careful evaluation of the alternatives in relation to your needs will yield important clues about the appropriate course of action for you.
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