How to Sell Structured Settlements
A structured settlement payouts cash owed from a legal judgment in the form of an annuity usually pays out cash payments over a period of time. However, structured settlements may also be offered by a third party or the defendant in a court proceeding. In most cases, both the plaintiff or defendant offers structured settlements.
The plaintiff (or defendant) may offer structured settlements to pay off medical bills, mortgage payments, and other financial obligations. These can often be less expensive than buying a new home, but there are some drawbacks to selling structured settlements. The first is that the annuities are usually taxed at a rate of 40% at the time of sale. Also, structured settlements are usually more expensive to buy, as the cash value depreciates over time.
One option for selling structured settlements is to take them over to a lender. Most lenders will require a down payment on the settlement, since this type of loan is considered a risky financial transaction. Also, it is likely that a substantial amount of down payment will have to be paid back in order to obtain the loan. This may result in higher interest rates and the risk of defaulting on the loan, especially if the borrower’s income is less than the required down payment.
Structured settlements can also be sold through a third party. If the defendant has been awarded the settlement, a third party can arrange for a quick sale of the settlement. The parties involved would need to negotiate for an acceptable price, as well as for a reasonable time to sell the settlement. Since the value of these settlements depreciates over time, the buyer of the structured settlements would likely be paying more for the same amount of money in a short period of time.
While a third party or a bank is not able to offer all of the benefits of structured settlements, they are not considered unsuitable for all borrowers. The buyer should thoroughly check the lending institution offering the structured settlements before signing a contract. A good credit history and a good income are required for most banks.
If you think that you are qualified for a structured settlement, contact a legal advisor or bankruptcy attorney who is familiar with these types of settlements to discuss the process with you and to determine your qualifications for a settlement. If you are eligible, you may wish to investigate your options regarding how to sell structured settlements.