How To Sell Structured Settlement Payments For a Discount Rate

Based on recent news about the secondary marketplace for structured settlements, you already know that transferring your future payments to a different company is perfectly legal. But knowing that you can sell your future payments to another company does not mean that you necessarily need to. The reality is that you may be better served by keeping your payments and receiving a lump sum of cash now than by taking a chance on being unable to receive a large chunk of your money in the future. By learning more about your options, you may decide that selling to a third party makes sense for you.

One of the primary reasons that people choose to sell their future payments is because they are experiencing an especially tough time making ends meet. In many cases, the lump sum of money that they receive will help them to alleviate some of their financial stresses. For others, however, the lump sum may be used to pay off large debts or to pay for healthcare costs or educational expenses. Even still others may use structured settlements to provide long-term assistance to the elderly or to support their families. No matter why you choose to sell structured settlements, it is critical that you understand whether or not the lump sum is greater than the cost of maintaining the payments yourself.

Another reason that people sell structured settlement payments is to avoid having to go to court date. While it is true that a transfer agreement allows the recipient to get the full amount of the payment at once, many recipients choose to delay or not even go to court date. If you have a binding contract with the company that issued your payments, it makes little sense to ignore the terms of the agreement. By deciding to skip court date, you may never actually receive a payment. It is often much more practical to be proactive about receiving your money and going to court to try and reclaim it from the company that is owing it to you.

One way to determine if you are able to sell structured settlements for a discount rate is to request an appraisal of the current market value of all your payment streams. Most companies allow you to request a free appraisal, but if they do not, you can get one performed by a third-party company. By determining the value of your payment streams, you will be able to determine what your realistic discount rate is.

Some companies prefer to settle for a lump sum in exchange for full rights to your future payments. Others prefer to retain the right to a portion of your future payments, allowing them to slowly distribute the funds according to their schedule. Your ability to decide how to divide up the monies is determined by how much income you currently receive and how much is needed to cover living expenses and other bills. This calculation is very complex and it is important to have a professional perform it. A court-appointed attorney may not have the necessary expertise to properly perform the calculation.

Once you have determined how much you will receive and what your percentage share is going to be, you will have to determine the price you will sell the structured settlement payments for. You will need to set a price that is reasonable for you, but still above the cost of collecting the monthly payment streams. The remaining balance will be held in a trust account and paid out over time. It is best to have a financial advisor help you with setting the price so that there are no discrepancies down the road.