Based on a recent article on the secondary structured settlements market for annuities, you already know that selling your settlements is perfectly legal. But knowing that you could sell your future payments means you shouldn’t. There’s a good reason why part of your future settlement was set up for you in the beginning – to protect your future. It’s the same reason why insurance companies write policies requiring they receive a certain percentage of the future settlement payments. If they didn’t, they’d be financially penalized and their business would crumble – for good. That’s not what the insurance companies want to see happen!
But why would anyone want to sell their future income stream? After all, receiving the lump sum payment now is much less costly than waiting years to receive it as a monthly structured settlement. After all, if you don’t need the money now, why should the bank give it to you? In most cases, the answer is that they’ll force you to get the money, but that’s not really fair. After all, isn’t the main purpose of having these insurance policies to protect your future? To ensure your financial security.
So why should you sell structured settlement payments? The answer depends entirely on your situation. If you have a strong case, it makes sense to pursue such a sale in order to maximize your tax benefits. You can actually increase your future payments by selling the payments because they are exempt from future income tax.
The second reason to sell structured settlement payments is the best interest of your child. There are many real issues that arise in our society today involving children who were wrongfully held responsible for someone else’s act. If you live in a state that has some form of child support law, it may benefit you to know that you may be able to sell future payments to a third party factoring company. The factoring company will then pay the original sum to your ex-spouse or ex-child and use the proceeds to satisfy your obligations.
Another reason to sell structured settlement payments is the best interest of the child. Some of the worst things that can happen to a child are to be severely abused or to have their parents executed for non-payment of child support. Many people who have faced these issues choose to take the money that is owed to them today and to use it to make a more comfortable future for themselves or their children. In these cases, selling the payments is both smart and good business. By taking the money that is owed to them today, the factoring companies will most likely increase the amount they pay your ex-spouse or ex-child in the future and so it will benefit you as well as the child.
However, there are some restrictions that apply when it comes to selling your future payments. Before you decide on selling your future payments for lump sum cash, make sure that there are no other debts on your account that are priority debts and that you are not required to pay the lump sum if you stop receiving payments from one of your priority debts. It is also important to remember that when you sell structured settlement payments, the company that purchases your payments is legally obligated to pay you the lump sum if you request it. It is not a question of whether they will buy the payments; it is a question of when they will buy them. Before selling your payments, consult a financial expert to make sure that selling them is the best option for your financial needs.