How To Sell Structured Settlement Payments Successfully
Structured settlements help many injured persons and their family members by giving them reliable, regular income streams upon which they can survive after an accident. They protect individuals who can no longer work and rely solely on the periodic payments to sustain their basic needs. However, in some cases, the structured settlement is a vault keeping ill-informed owners out of getting access to funds that they require to pay off an unforeseen expense or settle debt. It may be worth billions, but the person receiving it might not need that amount given the present value of his or her settlement. There are some buyers who will take only the value of the cash up to the total amount owed.
For these individuals, selling structured settlements may be an attractive option. Potential buyers have access to millions of dollars every year. Some of these buyers purchase structured settlements as part of large financial transactions. They may offer cash in exchange for the settlement or keep the payments as a stock portfolio. Others are individual owners who decide to sell structured settlements to achieve tax relief. However, before an individual decides to sell, he must learn about the process of selling personal injury settlements and the pros and cons of each.
One of the advantages of selling structured settlement payments is that the individual receiving the payment does not have to pay taxes on it. The lump sum payment received from selling a settlement will be treated like a bank loan in most states. A portion of the lump sum is given to the buyer, usually in lump sum amounts of ten thousand dollars or higher. The remaining portion is given to the individual who was injured and used it to pay medical and living expenses. This leaves the injured person with the cash he or she started out with, which is why the amount they receive is usually less than what they would have received if they had sold the settlement payments in full.
Another advantage of selling future payments is that the buyer will get the lump sum at the agreed price much faster. Because of this fast sale, most buyers purchase the future payments when they are financially stable. If you are currently unemployed and are facing the prospect of losing your job because of financial problems, a lump sum payment is probably your best interest. In addition, if you own a home and face the prospect of foreclosure on it, a quick sale could save you from having to foreclose and lose your home.
When you negotiate for lump sum sales with buyers, it is important to mention the discount rate. This is a percentage figure indicating how much of your lump sum will be kept by the buying company. The discount rate is typically between forty-five and sixty percent. There are several factors that determine the discount rate, including the length of time you have had your payments, your credit rating, the amount of the remaining deferred payments, as well as other factors such as the amount of money remaining on the deferred payments.
Once you get quotes for selling your structured payments, it is time to go through the process of negotiation. Your broker can help you in this process by providing accurate quotes based on your information and personal circumstances. Brokers can also provide you with helpful advice on what to do before, during and after the selling process. Since this is a highly effective way to sell your payments, it is wise to only work with an experienced broker who can guide you through the entire process in an effective manner.