When you sell structured settlement payments, you want to be aware of the potential financial ramifications of your decision. Fortunately, if you decide to sell all or some of your present payments, these financial considerations are generally easy to assess. Note: each of these choices will also have a different present value:

Most buyers of structured settlements choose to buy them from third party buyers called factoring companies. Factoring companies buy structured settlements from individuals and then give them a lump sum payment in exchange. While selling to factoring companies can be profitable, dealing with these companies can also be perilous. Here are three important considerations to keep in mind when deciding to sell your structured settlements to Factoring Companies.

-The most important consideration is the effect on your present financial situation as well as your long-term financial plans. The value of each structured settlement will vary significantly from person to person depending on their current lifestyle, their employment, their credit rating, their driving history, etc. Since selling future payments represents a final expense that you cannot change in any way, it is important that you carefully consider the amount of return you can expect from selling. If you currently make enough money to provide an adequate living environment for yourself and your family at a level that is acceptable to you and your spouse, selling structured settlement payments is not worth your time.

-If you are not able to anticipate an increase in your income, are unemployed, or do not have the financial means to support yourself and your family at a level that is acceptable to you, selling may not be worth your time. In addition, future payments may need to be paid in full to avoid accumulating interest and late fees. Moreover, your lump sum may need to be paid out over a significant period of time in order to cover other bills and obligations that become due during the course of the remaining term of your contract. Even if you do not require immediate cash, selling may still be worth your time since your payments may need to be made in the near future.

-The last thing you should consider is the discount factor. A discount factor is the amount of income or potential income that would be realized through a sale of structured settlement payments. The lower the discount factor, the more likely you are to receive a greater lump sum payment than if the value of your future payments were higher.

While the lump sum payment is one of the main advantages of selling future payments to factoring companies, you should also consider the discount rate and the amount of time it will take for the lump sum to be realized through a sale. Factoring companies can offer you a lump sum payment in as little as a week. However, it may take several months or even years before the entire amount of your structured settlements will be realized through these sales. Before selling your structured settlements to factoring companies, you should carefully consider the consequences of such action. Remember, your best interests are usually the most important ones.