Should You Sell Your Structured Settlement?
In a perfect world, ample money would stream into a household to pay for medical bills, food, housing, and the children – and a savings cushion would be built up to cover unforeseen events. Unfortunately, life doesn’t always go as planned. Sometimes your only option is to sell your structured settlement to a lawsuit funding company in exchange for a lump sum cash payment to cover your immediate needs. As with any financial decision, there are pros and cons to this arrangement.
Pros of selling a structured settlement
Monthly payments are designed to help injured plaintiffs pay for medical and living expenses little by little and provide individuals with secure, long-term financial stability. However, a modest monthly stipend may not help when the plaintiff becomes unemployed, is on the verge of losing a home due to a ballooning mortgage payment, or suffers a large market investment loss.
If you sell a structured settlement, you may enjoy the following benefits:
- You get a larger lump sum of cash NOW to pay for immediate expenses that can’t wait.
- The cash you get for your structured settlement is money you will never need to repay.
- There are no out-of-pocket fees for selling a settlement – just money in your pocket.
- It may be more meaningful to get the money today before the value of the dollar declines.
- Unlike credit cards, a lump sum payment for your settlement does not cost you interest.
- Unlike cashing out a 401K, there are no penalties for selling your structured settlement for cash.
- Unlike certain loans, you can use the lump sum for anything you want, no questions asked.
- Sometimes you can sell off part of your settlement to get money now and still get paid monthly.
- A lump sum infusion of cash lets you make an investment that could pay off big in the long run.
- Selling now helps you upgrade your home, pay off your mortgage or improve your life situation.
Cons of selling your structured settlement
Getting a lump sum of cash is the ideal situation for people who have suffered hardship – be it a divorce, sudden disability, job loss, a loved one in need of bail money, ballooning mortgage payments, or an unexpected housing disaster. Yet, one must always consider the risks of selling a structured settlement payment as well.
Potential pitfalls when you sell your structured settlement may include:
- Two thirds of states place restrictions on these sales, so court approval may be required.
- A lump sum payment comes in one fell swoop; once it’s gone, it’s gone!
- Sometimes a lump sum received through the sale of a settlement is taxed.
- The sale could take up to four or six weeks to process through the proper legal channels.
- In the long run, selling a structured settlement never nets as much money as cashing in monthly.
Finance whiz Suze Orman once advised a couple who wanted to sell a structured settlement to instead invest the entire $400 a month into a Roth IRA for 20 years. With a conservative 5% annual return, they would amass $165,000 by 2034. By retirement time, the couple would have $340,000.
Tips on negotiating with a lawsuit funding company
You can work with a lawsuit funding company to sell your structured settlement off early and come out ahead. Before calling, you’ll want to do your homework and look up the company on the Better Business Bureau. For instance, Lawstreet Capital has been a Better Business Bureau accredited company since January 2013 with a perfect “A” rating. You can also check with the Attorney General’s Office in your state to make sure the company is legit.
Before agreeing to anything, be sure to get a concrete offer in writing and understand what the transaction requires. Be aware that it could take time for the funding company to go through the courts process to get your money. Some people choose to seek financial advice from a lawyer or financial advisor before making the final call.
If you are considering selling a structured settlement in exchange for a lump sum payment, call LawStreet Capital today for a free, confidential, no-obligation assessment of your situation. We’d be happy to answer all of your questions at 1.866.FUND.662.