If you’re considering selling your structured settlement, you may be wondering how to get started. Here are some of the basics you should know: Cashing out your structured settlement is a major financial decision that should only be made after careful consideration and with sound advice. You don’t want to make a mistake that could negatively impact your future.
Determining Your Needs
The decision to sell your structured settlement payments may be a difficult one, but it is a necessary step for people who are in a financial crisis. You might be in need of a large sum of cash right now to pay off high interest debt, make urgent home renovations or provide for your family’s future needs.
A structured settlement is a payment stream for personal injury, medical malpractice or wrongful death cases that allows claimants to receive periodic payments or a lump sum in exchange for the rights to future payments. Thousands of people each year use structured settlements as a source of tax-free income.
Structured settlements are an important source of financial security for many plaintiffs, providing a level of protection from unexpected expenses while helping them to maintain a reasonable standard of living. However, life is unpredictable and financial situations can change.
Getting Court Approval
While structured settlements offer financial security over many years, sometimes life happens and there are immediate needs that demand a large lump sum of cash. It may be for medical bills, home repairs, credit card debt, or college tuition payments.
When these situations occur, it’s important to know that you have the legal right to sell some or all of your future payments. However, in order to do so, you must obtain court approval.
There are federal laws and state structured settlement protection acts that govern this process. These laws aim to protect you and keep predatory third parties in check.
A judge will need to approve the sale of your structured settlement payments based on a standard called the “best interest” standard. This requires a judge to consider your best interest, the best interests of any applicable dependents, and other factors before approving the sale.
Choosing a Factoring Company
There are a few things to consider when choosing a factoring company. First, look for a company that has been around for a while and has a great reputation.
Second, ask if they have a transparent pricing structure and if they will meet your cash flow needs. You should also ask if they have clients who are satisfied with their service.
Third, find out how frequently and quickly your invoices will be funded and payments applied to your account. A reputable factoring company will make it easy for you to manage your invoices, get paid, and grow your business.
Advances: Sometimes a factoring company will provide you with an advance in your structured settlement payment. This advance is recouped from your lump sum once the deal is complete.
You can choose to sell your entire structured settlement or sell a specific number of payments. Regardless of the option you choose, it is important to ensure that the sale is in your best interest before you agree to sell.
Getting a Quote
If you are considering selling your structured settlement, it is best to get quotes from several buyers. This will help you determine how much cash you can expect to receive.
It’s important to get a quote from an insurance agent who holds an active life insurance license in your state. You can verify this online by visiting your state’s consumer portal and using the license number.
In addition, you should choose a factoring company with an excellent track record of protecting the financial interests of its clients. Some factoring companies offer discounts of up to 30%.
Obtaining a quote for your structured settlement is as simple as shopping around. The buying company’s discount rate — along with its fees — will affect how much money you’ll receive.