Selling a structured settlement is a big decision, but you may need a lump sum of cash now in lieu of future payments. There are simply times when it becomes very important for you to have a large sum of money at your disposal. These can be times of hardship such as a medical emergency, etc. In such a situation a person would always try to secure some money through the medium of raising debt, but what would you do if are unable to raise debt and your need is quite urgent. Well, these days there is a very innovative financial instrument that can help you in raising money very quickly. That instrument is the sale of your structured settlement.
Many people may receive structured settlements for several different reasons, but the amount of money received is in small denominations and is received over a long period of time. The sale of a structured settlement gives you the option of getting all the money to be received in the future as a lump sum by a simply transferring your right to a structured settlement to a buyer company. There are several pros and cons relating to the sale of structured settlements.
Let us take a look at what these are and decide whether it is good to go in for such a sale or not.
The primary advantage of selling your settlement is that you gain access to a large sum of cash, which you would otherwise get in tiny pieces over a period of several years. This means that selling a settlement would give you the opportunity to fulfill your present obligations such as credit card debt, home mortgage, education expenses, etc.
Before thinking of selling a structured settlement one should realize that the sale itself is going to cost you money.
This is due to the fact that you would have to hire a consultant who is going to consult a lawyer, find a purchaser for you and take permission from the court of law on your behalf to sell your settlement. And for these services he is going to charge you a fee.
Another thing to note before thinking of selling your structured settlement is that such a transaction has a very large tax liability. So before you go in for accepting any offer for your settlement you should make sure how much you would have to pay the IRS in taxes and what is the net amount you are going to pocket.
Selling a settlement is a court issue and you need to approach the court to get permission to sell your settlement. This requires you to hire a lawyer and provide documentary proof to the court that your reasons for selling are appropriate.
A positive point with regards to selling your settlement is that by getting a lump sum today you would be spared from a continuous fall in the value of the settlement that you are receiving.
For example, suppose you have settlement of $100,000 for which you are getting $500 every month, selling that settlement for say $80,000 would be better for you as what $500 can buy you today may not be able to buy the same for you two or three years in the future.
These are some of the things that you need to take into consideration before thinking of whether to go in for the sale of your structured settlement or not. The sale of a structured settlement is something that should be done with utmost care and only if the need is very immediate.