How to Sell a Structured Settlement

If you have received a structured settlement, but need cash up front, you may want to sell the settlement. This guide to how to sell a structured settlement will educate you on what you need to know.
Disclaimer

The content in this page is not a substitute for professional financial advice. Please contact your financial adviser before using the information presented here.

Introduction
- If you are receiving structured settlement payments, but have a sudden need for cash, you may be able to factor the arrangement in return for a lump sum payment. This is done by selling the rights to receive the payments in return for a payment from an investor who is looking to receive future income.
Step 1: What are Structured Settlements?
- When law suits are settled, damages may be awarded in a lump sum, or a series of payments. A settlement which is awarded in a series of payments over time is called a structured settlement.
1. A plaintiff may prefer a structured settlement as there may be tax benefits available depending on their individual circumstances.
2. Defendants can purchase annuities to fund the payments, allowing them to pay the judgment with a lump sum, even though the plaintiff is receiving future payments.
Step 2: How to Sell a Structured Settlement
- If you have large medical expenses, or have experienced a sudden financial emergency, you might wish you'd taken a lump sum payment instead of a structured settlement. Even if you have received a structured settlement, you might be able turn it into cash by selling it to an investor. The process may take up to 90 days. Here's what you need to know before entering into a contract to factor your settlement:
1. Approximately two thirds of states restrict the sale of structured settlements.
2. Federal law restricts the sale of tax-free structured settlements.
3. If the settlement is funded by an annuity, the insurance company may not transfer the benefits to a third party.
4. You may need to go back to court to have the sale approved by a judge.
  1. The judge will evaluate the circumstances to determine whether the seller will actually benefit from the transaction.
  2. The judge may also evaluate the impact of the sale on the seller's heirs.
5. Because of the legal issues involved, you should consult with an attorney before selling your settlement.
Step 3: Selecting a Purchaser for Your Structured Settlement
- You should be careful when selecting a purchaser for your structured settlement.
1. Prices vary, so make sure to get multiple quotes.
2. Only do business with reputable established companies, as you want to make sure you'll receive your payment.
  1. Check out their past payment records.
  2. Ask about their working relationships with the insurance company that handled your settlement. A good relationship will help to ensure the transaction is processed quickly.
3. Only do business with a purchaser that is bonded.