How To Sell Structured Settlements

Structured settlements come from many sources; lottery, insurance, lawsuits.  Figuring out how to sell structured settlements can help you get a lot of cash in a pinch.  For some, selling them is as easy as dialing up a buyer and going through the approval process. For others (and for everyone in some states), they have to jump through serious legal hoops in order to sell their structured settlement.  It's very rare for private buyers to purchase your settlement, so you'll end up using a company that specializes in buying them.

In short, selling a structured settlement involves finding an agency that specializes in buying annuity payments.  The process will usually involve a court hearing in which a judge will hear the deal to decide if it is fair for both parties.  This protects you and the structured settlement company.  In the end, you will receive a fair amount for your structured settlement.  The company will charge a fee that is usually seen as a percentage of the total purchase.  The fee is normally between 15-30%, and will vary depending on a number of factors, which we will look into below.

Lets look at some factors that affect the fees of selling a structured settlement and options that are available to you.

Image courtesy of Borman818 via Flickr.
Image courtesy of Borman818 via Flickr.

Researching Investment Companies

When you feel it's time to sell structured settlement payments you have a few decisions to make first.  The most important is whether you plan on selling all of your payments or a fraction of them.  The second decision is who you will sell them to.  

Selling a portion of your structured settlement will give you however much cash you want right now and allow you to receive annuity payments again in the future.  This is great when you are faced with an expense or investment that you know how much it'll cost up front.  The partial buyout is a much safer choice and easier to get legal approval.  

If you know how much you want to sell, it's time to find a buyer.  Almost all of the websites that you will find with a simple Google search will ask you for your personal information and how much you want to sell.  When filling these out expect a ton of phone calls after submitting the form.  Some of these sites are built only to get your information.  After you fill the form, they will sell your info to an investment company as a "lead."  Do all of the research you can about a specific company without actually visiting their website.

What Affects The Fees?

The fee that is charged when you sell structured settlements varies, and is dependent on a few factors. The length of the annuity affects the fee because of inflation. If you have a structured settlement that will pay a million dollars over five years and another that pays over 50 years, inflation will have lowered the value of a dollar significantly after the longer time. This equates to a larger fee that the investment company will charge.

Also, the larger the annuity buyout, the lower the fee. This doesn't mean that you will have to pay less money, but it does mean that you will pay a lower percentage. A partial buyout will have a higher fee than a total buyout.

Legal Info on Structured Settlements

Legal Obstacles

In most states selling structured settlements has to receive legal approval.  This is a system of checks and balances that protects both you and the investor.  If the judge does not grant approval to the offer made, it is (normally) the investment company's responsibility to draft a new offer.  There should not be any cost passed on to you for that.

When you sell a structured settlement the money isn't turned over right away, but the waiting and the process protect you from dishonest investment companies.

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