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How To Buy Structured Settlement Payments?

Updated on December 19, 2011

Buying structured settlement payments is an investment in the future.  You may wonder who would give up having money in the present to wait for structured settlement payments to trickle in, but there is a method to this apparent madness. 

A structured settlement is paid out after a lawsuit is won or an insurance claim is accepted.  Instead of receiving the money as one large lump sum, the individual receives the money in regular payments.  These structured settlement payments pay out the amount owed in installments over time. 

It seems strange that anyone would choose to buy structured settlement payments.  Why would you pay money just to get money that you will not have for some time?  Wouldn't it be better to just take the money that you have now and invest that?  The thing you need to know is that buying structured settlement payments is an investment.  You just need to know the details.

How Cash For Structured Settled Arrangements Work

For an arrangement such as this you would pay money now for the rights to receive the structured settlement payments that will be received in the future. The trick is that you do not pay the full worth of these settlement payments. You only pay for a portion of each payment. Then as you receive payments, you earn more money with each one. Paying for a portion of them now gets you the full amount later.

The individual selling the payments to you is paying for the ability to have a large lump sum of cash now. They do not get the full amount that they would have received over time, but they do not have to wait for the payments to come; if that individual needs the cash to survive or for a needed or wanted purchase, even a lower overall income is more profitable for them in the end.

If you can wait to turn a profit then this action can be an investment on your part. It is an easy and sure way to make money. All you have to do is find a party interested in accepting a cash for structured settlement payment arrangement, and you have ensured returns on your investment.

That is another bonus.  You know what your returns are going to be ahead of time.  You do not need to worry about receiving less money than you plan for because you know the amount of the structured settlement payments ahead of time.  Where else can you find an investment that gives you a guarantee on how much money you will receive?

How Do You Know If Buying A Structured Settlement Is Worth It?

You will need a structured settlement calculator.  This is where you have to do the math.  You need to figure out how much you can afford.  This is always the first step.  If you cannot afford to buy out the total amount then you may offer to buy out a certain number of payments or perhaps a portion of each payment.  This may make matters more complicated but can be the way to go if you do not have the full amount or if the individual does not wish to sell all of his or her payments.

Once you figure out how much you can pay for a structured settlement then you will need to take a look at how much of a return you will see on your investment.  One factor that should not be overlooked is inflation.  The value of a dollar now and the value of a dollar ten years from now is not going to be the same.  You do not want to come out ahead on paper and behind in real life.

You should also be aware that there are laws governing this sort of transaction, so if you are interested in investing in this way then you will need to partner either with an established firm which you will back or with an attorney who can help you.  Their costs and their "cut" is another expense to consider.

Buying structured settlement payments is a matter of figuring out all the numbers involved.  You need an interested party, the funds to buy out structured settlement payments, and a deal where you will come out ahead. 

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