On this page
What's next
Earn a high-yield savings rate with JG Wentworth Debt Relief
Should I Keep My Structured Settlement or Get a Lump Sum?
by
JG Wentworth
•
January 6, 2026
•
9 min
This information is provided for educational and informational purposes only. Such information or materials do not constitute and are not intended to provide legal, accounting, or tax advice and should not be relied on in that respect. We suggest that You consult an attorney, accountant, and/or financial advisor to answer any financial or legal questions.
Structured settlements are designed to provide long-term financial security after a personal injury lawsuit, medical malpractice claim, or wrongful death case. But life circumstances change, and many people eventually ask the same question: should I keep my structured settlement or sell it for a lump sum?
There is no one-size-fits-all answer. The right choice depends on your financial stability, goals, risks, and the trade-offs involved. This article breaks down the key factors to help you make an informed decision.
What a structured settlement actually provides
A structured settlement is a series of guaranteed payments set up through an annuity. Instead of receiving one large payout, you get money over time—monthly, yearly, or in larger scheduled installments.
Key benefits include:
- Predictable income: Payments typically last for years or even a lifetime.
- Tax advantages: In many injury-related settlements, the payments are tax-free.
- Protection from overspending: The installment structure makes it harder to run through the money quickly.
- Long-term financial security: This can be especially valuable if you have ongoing medical needs or cannot work.
Structured settlements are built to offer stability. But they also come with limitations.
Why some people consider selling for a lump sum
A lump-sum sale—often called “factoring” your structured settlement—means selling some or all of your future payments to a company in exchange for immediate cash. People usually consider this when:
- Facing unexpected expenses, such as medical bills, caregiving costs, or major household repairs.
- Managing high-interest debt and wanting to pay it off at once.
- Needing capital to start or grow a business.
- Handling financial emergencies like eviction, foreclosure, or job loss.
- Purchasing a home or vehicle.
The appeal is immediate liquidity. But the trade-off is steep: companies that buy structured settlements offer less than the total future value of the payments. That discount is the core risk.
Get Cash Now for Your Payments
Exchange your future structured settlement payments
for a lump sum of cash
Get a $100 Gift Card Just for Getting a FREE Quote*
"*" indicates required fields
Understanding how much you actually receive
When you sell a structured settlement, the buying company uses a “discount rate” to calculate the present value of your future payments. This rate reflects profit, risk, and administrative costs.
For example:
- You might have $100,000 in future payments.
- A buyer may offer $45,000–$65,000, depending on the discount rate and schedule.
This difference can surprise people. It is not that companies are being unfair; it is simply how present-value calculations work. But it means you must carefully evaluate whether the immediate cash is worth the long-term loss.
The legal process you must follow
You cannot simply sign over your structured settlement. Federal and state laws require court approval for any sale to ensure it is in your best interest.
The typical process includes:
- Receiving a quote from one or more settlement buyers.
- Submitting the proposed transfer to a judge.
- Attending a court hearing, where the judge reviews your finances and reasoning.
- Receiving approval or denial.
Judges often ask:
- Why do you need the lump sum?
- Do you understand the discount rate and cost?
- Do you have other ways to meet your financial needs?
- Will losing income harm your long-term stability?
This safeguard exists because people sometimes sell their settlements impulsively. Court oversight helps ensure the decision is carefully considered.
Reasons to keep your structured settlement
Sticking with the long-term payment plan is often the most financially protective choice. You may be better off keeping your settlement if:
- You rely on it for living expenses: If the payments help cover bills, rent, food, or medical care, selling them may jeopardize your stability.
- You want guaranteed, low-risk income: Structured settlement annuities offer reliable, predictable payments you can count on regardless of market conditions.
- You have difficulty budgeting: A lump sum can be tempting to spend quickly. Structured payments space out your income so you are less likely to run out of money.
- You don’t urgently need cash: Selling your payments at a discount is costly. If you can maintain your current financial situation without selling, that is often better.
- You have significant long-term medical needs: Regular payments offer ongoing support that a one-time cash infusion may not match.
- You want to preserve tax advantages: Depending on the nature of your settlement, future payments may be tax-free—but selling them may have tax implications. Getting advice is wise.
- You already have other savings or income sources: In this case, the security of stable payments can work alongside your broader financial plan.
Reasons to consider a lump-sum sale
Selling can make sense when the long-term security of payments is outweighed by your immediate financial situation or strategic goals.
- You’re struggling with high-interest debt: If you are carrying credit card debt at 20–30% interest, a lump sum may save you more in the long run—even after the discount rate.
- You’re facing urgent life needs: Unexpected medical emergencies, home repairs, funerals, or legal costs might require immediate cash you do not have.
- You want to make a major purchase that improves stability: Putting a down payment on a home, buying a reliable vehicle for work, paying for education or job training.
- You’re pursuing a business opportunity: A lump sum might allow you to launch or expand a business that can generate more income over time. But business investments carry risks, so you should weigh this carefully.
- You want to consolidate multiple streams of payments: Some people have complicated payment schedules. Selling and consolidating can simplify their financial picture.
Financial risks to consider before selling
Selling is not inherently wrong, but it is irreversible. Weigh these potential risks:
- Loss of long-term income: You cannot get the payments back once sold. If circumstances change, you may regret losing guaranteed money.
- Lower total value: Because buyers discount the value of future payments, you receive less than the face value.
- Potential impact on government benefits: Depending on your state, the lump sum could affect eligibility for needs-based programs like Medicaid or SSI.
- Impact on taxes: Most structured settlement payments from personal injury cases are tax-free, but the sale proceeds may not be. A tax professional can help clarify.
- Pressure or misleading sales tactics: Some factoring companies rely on aggressive marketing. Always compare multiple quotes and get independent advice.
Practical steps before making a decision
A few tips on how to get organized…
Step 1: Assess your financial situation
List your income, expenses, debts, and upcoming needs. Consider alternatives, such as:
- Low-interest loans
- Budget restructuring
- Debt consolidation
- Assistance programs
- Borrowing against an asset you already own
If other options meet your needs, you may not need to sell.
Step 2: Get multiple quotes
Different buyers offer different discount rates. Comparing them can significantly increase what you receive.
Step 3: Talk to a financial advisor or attorney
A professional can help you understand:
- Whether the sale is in your best long-term interest
- How much the payments are worth today
- The tax implications
- Whether the timing makes sense
Step 4: Consider selling only part of your payments
You do not have to sell everything. Partial sales allow you to get some cash now while keeping future income.
Step 5: Prepare for court approval
Make sure you can explain:
- Why you need the lump sum
- How the sale will help you
- How you will manage your finances afterward
Judges are more likely to approve well-reasoned, necessary cases.
A balanced framework for making the decision
Let’s break it all down so you can determine the best path forward…
Keeping your structured settlement may make sense if:
- You need reliable income.
- You want to minimize risk.
- Your expenses are manageable.
- You do not urgently need cash.
- You worry about spending a lump sum too quickly.
- You value the long-term security of guaranteed payments.
Selling for a lump sum may make sense if:
- You have urgent, legitimate financial needs.
- You can use the cash in a way that improves long-term stability.
- The discount rate is reasonable relative to your goals.
- You have the discipline to manage a large sum.
- You’ve explored alternatives but still need immediate funds.
The bottom line
Deciding whether to keep your structured settlement or obtain a lump sum is personal and complex. Both choices can be responsible and financially sound—depending on the circumstances.
Keeping your structured settlement is typically better for long-term stability, budgeting, and risk reduction.
Selling for a lump sum may be appropriate when you have a clear, essential financial need or a well-planned investment that outweighs the discounted value of the sale.
Before finalizing any decision:
- Evaluate your financial picture honestly.
- Consider partial rather than full sale options.
- Compare quotes carefully.
- Seek advice from a trusted financial professional.
With thoughtful planning, you can choose the option that best supports your financial security—both now and in the future.
There’s always JG Wentworth…
Life always finds a way to surprise us—and sometimes, surprises can put an unexpected strain on our finances. For most Americans, the best option in an emergency is to take on debt to cover the expense. Even if you don’t have an emergency—maybe you want to go back to school or put down a payment on a house—it can be difficult to come up with the funds for an immediate need without incurring debt.
But if you have a structured settlement, you have another option available!
Selling part or all of your structured settlement payment stream is a great way to keep your head above water while avoiding taking on extra debt. If you need cash in a pinch to take care of a major expense, this could be the best solution.
Contact JG Wentworth today for your free quote and let’s get your Cash Now!
About the author
Recommended reading for you
* Sales of Structured Settlement and Lottery Payments are subject to Court Approval and other conditions which can take 60-90 days to complete. Annuity payment sales are also subject to certain conditions. All transactions are at our sole discretion.