Congratulations! You won a settlement. That means a court case went in your favor, and you didn’t even have to sit through a lengthy trial to win it. But not so fast. The settlement is structured. Structured, for those of you who don’t know, means that the payment doesn’t come all at once. It is bound up by a financial company who pay it out a little at a time. These things were set up so that people could get a steady payout from their settlement, without the temptation or opportunity to blow it all at once. This sounds like a good idea, but it’s a pain for lots of people who would use their settlement money for a profitable purpose and who would like the option to have it all in one lump sum. This option is not always made available to plaintiffs, meaning that in order to get a lump sum, individuals will have to sell their settlement to a third party. These third parties offer cash for structured settlement payments, meaning that they’ll take on the contract for less than it is worth, because they can wait the entire length of the term for the payments to come through. Here are some details to consider if this is an option that is on your radar.
- Can You Do Better With the Money? I would recommend this kind of sale only for people who have a great plan for the money. You’re not allowed to sell a structured financial product like this in order to do things the state courts consider frivolous, like go on a fancy vacation or buying a sports car. They will let you sell in order to cancel out an expensive loan or to buy a house, both examples of financial moves that they consider wise and profitable. So ask yourself, “Do I have a better plan for this money?” If not, leave the structured payments alone.
- Can You Take the Loss? Structured settlement payments provide security to material needs. They’re a reliable source of income that lasts months, years, or decades. Can you afford to lose this income source by opting for a lump sum? Also, are you willing to lose a big chunk of the value of your structured settlement, in exchange for the convenience of a lump sum? Work these questions over with a financial professional if you need some advice on the matter, and only act if you are comfortable with all the terms.
Structured settlements are a great idea, but they don’t always serve the needs of real life individuals. If you are saddled with a long term structured settlement, and you need to find a way to turn it into a lump sum, call the company listed above or one similar. It’s important to get a few quotes when you do something like this, so it won’t hurt to shop around. Then and only then, make a decision that is right for you, your plans, and your financial reality. Structured settlements don’t work for everyone, but make sure that someone is you before you change up the plan.