Based on recent news about the secondary private market for structured settlements, you already know that selling your structured settlements for a lump sum payment is perfectly legal. But knowing that you are legally permitted to sell your future payments does not mean that you ought to. There are a number of reasons why you may wish to sell off your future payments. Perhaps you are having trouble meeting all of your obligations, or maybe you’re bored with paying the high interest rate. It’s really up to you. But you need to be aware that selling your future payments for a lump sum payment may be just what is needed to help you resolve your financial issues.

If you decide that selling your future payments is the right move for you, there are several factors that will play a part in determining what your settlement’s selling price will be. The primary factor, of course, is what your present value is-the amount of money that you currently have available to you as a lump sum. Other things that will influence the sale of your annuity are the maturity date of your annuity, the discount rate at which your annuity is purchased, and the surrender charge.

One of the main reasons that people decide to sell structured settlement payments is to take advantage of any tax benefits they may be eligible to receive. The IRS allows you to deduct the full face value of your annuity, regardless of whether you are using it to buy a product or whether you are selling it. That’s a significant savings for most people; however, there are a few things that you can do to reduce the amount that you will ultimately get from this benefit of the tax law.

You can buy structured settlements from some factoring companies, but you must remember that these are not “real” companies-just companies that have formed legal partnerships with financial institutions in order to process your annuity payments for you. In other words, when you give these factoring companies money to purchase your annuity payments, they are not really buying anything from you-they are merely passing your money on to the buyer. This factoring company will also require you to agree to a “fee” for their services. In most instances, the fee charged is less than the amount of money you would pay to a broker, but the factoring company does have some kind of investment in the structure of your annuity, so it is possible that you will not get the full face value of your annuity. You might also find that the factoring company charges you a fee for every time you want to sell your annuity, even if you do not intend to do so. These fees can add up significantly, especially if you want to sell all or only a portion of your annuity.

You should also keep in mind that factoring companies will sometimes try to “game” the system and charge you more than the agreed discount rate. They will request additional paperwork, often asking to see documents that only a lawyer can prepare. If you do not have a lot of experience in these matters, this can be very time consuming. In fact, if you are already dealing with a company that is requesting these types of documents, the factoring company may feel pressured into providing them at no extra cost. When this happens, the deal you make may not result in the highest discount rate, but you could still be paying too much.

The bottom line is that you need to know what you are getting into before you sign on the dotted line. Don’t just take the word of a debt relief firm or a quack doctor. Shop around, research the market, and compare the various options you have available before you make your decision. Structured settlements are a great way to resolve financial hardships, but they are not something that should be given to just anyone. Before you sign a check, make sure you are making an informed decision based on the information above.