Should You Sell Your Structured Settlements?

Lottery payments

What are Structured Settlements?

When a person wins the lottery, is victorious in a lawsuit, or is placed in another circumstance where they might receive a monetary prize, they often receive payments over the course of years rather than all of the money at once. This isn’t always desirable, as often the money is needed for medical bills or other expenses. Insurance statistics show that nearly 30% of all victims involved in an accident use all the funds from their cases within two months of recovery, and nearly 90% need all the money within five years. If you’re stuck being with a settlement being paid out within months or years, this might not be a reasonable financial situation. Many companies are involved in purchasing structured settlements. What this means is that you will get cash for settlements now, and no longer receive the long term payments previously associated with these structured settlements.

Why Sell Annuity Payments?

A person may also need a lump sum payment for a mortgage down payment, college tuition costs, or to avoid bankruptcy. Most institutions that lend mortgages require a cash down payment of 5 to 20% of the sale price, and this may change depending on where the house is bought. If a house costs $200,000, this could be up to $40,000! Most people don’t keep this kind of cash lying around the house. Loan debt owed in the U.S. has $1.21 trillion in 2014 to $1.3 trillion in 2015. This is partially due to the average cost of tuition and fees for a school year being $31,231 at private institutions, and $9,139 for in-state residents attending public institutions. Although many schools provide financial aid and payment plans, a student might still need a large amount of cash to start themselves on their journey to higher education. If this cash is needed now and there is no amount of financial planning that will create this money in the near future, you could decide to sell your structured settlement and receive cash from a company involved in purchasing structured settlements.

How to Decide if You Should Sell Your Structured Settlement

If you want to see if a lump sum payment is good for you, you need to calculate your expenses for the next few years. If you are facing a large amount of medical bills due right away, or need to buy a new house or pay student tuition, it might be the right choice. Keep in mind though that although you get the money right away, often you will lose money in the long term since you won’t be getting those continuous payments. You can think of it as an early withdrawal fee. If you need to avoid other fines, for bankruptcy or a lower score on your credit report because of unpaid bills, it still may be the right choice to look into companies purchasing structured settlements.

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