If you need structured settlement cash now to pay off debts, if you need to make an important purchase, or if you are trying to avoid foreclosures, and you have a structured settlement or an annuity, you may consider selling your structured settlement or annuity payments to get the money that you need now. Although selling your structured settlement may sound like a brilliant idea, you must consider the consequences of giving up your future structured settlement payments for a lump sum buyout. It is important to assess your final decision to sell your structured settlement, considering the following:
Future Security
Structured settlements are designed to provide long term stability and future security. With regular monthly payments you know that you will have some income no matter what your job situation or the state of the economy. Certainly structured settlements can be a life saver in difficult times. So ask yourself if you will be able to make ends meet if you take structured settlement cash now.
Fair Pricing
Getting structured settlement cash now is easy, but finding an honest company that will give you a good rate is not a sure thing. Make sure that you get a fair price (calculated by using a “discount rate”) – this is crucial. Some less reputable structured settlement purchasing companies (called factoring companies) will charge you discount rates that are way too high, paying you just a small fraction of what your settlement would pay over time. Of course, you have to expect that you will pay something, but the amount you are charged should be reasonable. Often the court will catch, and deny, unfair price gouging, but you can’t count on that – ensure that you do your homework and get the best price and rate possible.
Also, be wary of companies that give you one quote, and then lower it later (with fees or because they were unrealistically high in the first place) – the change in price shows that the company may not have been fair with you.
Miscellaneous and Hidden Charges
Any time you get structured settlement cash now, some companies will charge you fees, such as court costs. In addition, some factoring companies will charge additional fees that lower the amount you receive, citing fees for things such as attorney fees, administrative fees, broker fees, and more. Make sure to check the final net price that you are being paid, request a list of all fees, have your own lawyer look at the paperwork, and compare the net price to you to other settlement purchasing companies.
Other Alternatives
You should explore whether you have any other options for getting the money that you need before getting structured settlement cash now. Granted, for many people it makes sense to sell structured settlement payments for a lump sum right away. On the other hand, some clients are able to access lower cost loans to meet their financial needs while other clients have decided that selling only part of their payments makes more sense for them. Selling your structured settlement is your decision at the end of the day; however, make sure that you are making an informed decision – and consider how you are benefiting compared to what you are giving up before you sign the dotted line.
