Selling Your Structured Settlement

When you sell your structured settlement, you can sell all or part of the settlement to a company for a lump sum (this all depends on what your state law allows). The idea behind selling it is that you are able to consolidate a future stream of payments into cash today.

What should you watch out for in selling your structured settlement?

    You’re not getting full value. This is pretty obvious since these companies have to make money somewhere. You will not get the full value of your annuity, or whatever portion of the annuity you sell, when you sell it because the buyer needs to show a return somewhere. In more common investment terms, you currently own a bond that pays out a coupon every month. That coupon won’t change so the only way to make money is to pay you less than it’s value. You get cash, they get a future stream of income.
    You may owe taxes. You may owe taxes if you sell your structured settlement, whereas you probably aren’t paying taxes on the structured settlement payouts. So if you do get a quote for your structured settlement, be sure to take into account the bite that taxes will take.
    Why are you selling it? If there’s an emergency and there’s no other way to get funds, you might not have a choice. If it’s not an emergency, try to find another way because you’re going to give up a lot of value by selling the structured settlement.