Sell My Structured Settlement: Is it a Good Option or a Road to Debt?
Sell My Structured Settlement: Should You Do It?
Step One: Research Sell My Structured Settlement Brokers
If you have a structured settlement which was decided on by the courts, congratulations! This means you have a payment coming for your legal issue, which was not your fault and you can get back to work, recover from your ordeal, and get on with your life.
But if you are like many people, you may need more money than the court will get you on the front end. Let's say you are in an accident and you are injured severely. You are perhaps out of work for weeks or even months. Your paycheck may stop due to going over the allowed time off work for illness so now what do you do?
Should you sell your structured settlement? A structured settlement loan or advance allows you to have your large pay-off immediately by advancing you a loan toward your future payments you'll receive. The courts often allow the defendant time to pay you over several months. But if you have a family and bills to pay (as most people do), you can't wait that long. So you may need an advance on your money. That's where a structured settlement comes in.
HERE'S HOW IT WORKS
You get the sell your structured settlement from the court (decision), then take this to a structured settlement company and show them what you will be receiving. Then, they can advance you a "loan" on the future payments you'll receive from the defendant in a civil or criminal case so that you can have your money now. Think carefully when considering whether to sell your structured settlement.
WHAT HAPPENS LATER
Once you get your structured settlement coming in, you use the money received to pay off the advance over time. So it's virtually like taking out a loan against your future settlement monies. But it gives you the power to use the settlement money now, when it need it most.
Disadvantages to Selling Your Structured Settlement
So getting an advance on a structured settlement sounds good right? It is in some ways. It allows you to have your cash settlement money immediately, when you need it, rather than waiting for months to collect it a little at a time.
But what is the down side? Is there a down side? The disadvantage to a structured settlement is that you will have to pay interest which can mount up to quite a bit over time. Like any loan, there is interest involved which you will have to pay in order to obtain the settlement. This rate can vary but it is usually fairly high since you are dealing with large sums of money.
For this reason, it is wise to do some "shopping around" like you would do with anything you decide to do, so that you are getting the most for your money. Once you decide "I am going to sell my structured settlement," you should compare companies which deal with this and see which ones offer the best rates and policies. This is one of those cases when it is wise to "read the fine print."
10 Steps to a Structured Settlement Plan
Before you sign on the bottom line, make sure you have done your homework. There are many structured settlement companies which promise to help you with your loan. But do some shopping first. Here is a list of 10 steps which may prove helpful in locating the best structured settlement plan:
Step One: Compare Settlement Companies
Start by looking for structured settlement information, such as in this article and look for different companies which offer structured settlement plans. Find out what their policies are, how much the interest rate is (very important) and how long you will be paying on it. Think about whether you should say yes to the question: "Should I sell my structured settlement?" or if you can make ends meet and rearrange your budget until your money starts coming in.
You don't want to take out a loan for a structured settlement if there is another way to make it. Because, as good as it is to get your entire payments in advance, there is interest to be paid and truth be told, it IS a loan.
So shop around first to determine if this is right for you and which company you should deal with.
Step Two: Accept the Plan
If you decide you've found a company that is right for your needs, accept the cash offer then fax your structured settlement agreement to your company so that payments can be verified. The cash settlement advance company must have it in writing regarding what you expect to receive, so that you can receive your advance. This is their "collateral" or proof that you have the funds coming in at a later time.
More Structured Settlement Steps
Step Three: Sign The Documents
Normally what happens is, after accepting the cash payment from the company advancing you the settlement funds, you will receive the official documents via Fed Ex or other courier for you to sign. This is an important step and you should receive professional legal advice before signing any document, to be sure that you understand what you are agreeing to. You can seek advice from your attorney, if you have one, or from your financial planner or adviser. You can use anyone you trust to look over the documents before you sign but it is advisable to have an attorney do this, since they are usually more familiar with the law and what certain terms mean than financial advisers or others are.
There is usually a time period in which you are able to cancel the agreement if, after looking over the documents, you decide that you cannot agree to the terms.
Steps 4-10: Sell My Structured Settlement
Step Four: Document Finalization
Once you have agreed to the terms, the company will verify your settlement and that you have the right to sell. Then they can finalized the paper work and begin the process.
Step Five: Legal Processes
Once payment is verified, the transfer company will get an attorney to submit the documents to the local court. Find out whether the company you are dealing with will pay for this process. Some companies take this cost out of your final payout. It is very important to find out whether your company you have chosen charges legal fees. Do not deal with companies who do this, as it can amount to an exorbitant amount of extra money you will have to pay back and which you have no control over.
Step Six: Notification of the Hearing
You will be notified by certified mail as to the date of the hearing.
Step Seven: The Hearing
At the hearing, you will be required to appear before a judge who will determine if the transaction is best for you. This is an extra legal process step which is designed to help you and protect you from companies who mean to take advantage of people who are seeking relief from immediate financial distress due to an accident or misfortune.
Step Eight: Approval
If the judge agrees and approves the arrangement, the order will be signed.
Step Nine: Acknowledgment
The decision will be sent to the insurance company or company handling the funds to notify them that payments can be released.
Step Ten: Receiving the Funds
Once the loan company acknowledges the order, they will send your payment.
Sell My Structured Settlement: Should You Do it?
So, now that you know the process, should you try to sell your structured settlement or not? We have discussed both the advantages (having the lump sum payment in your hands faster) and the disadvantages (having to owe someone over time).
Whether you decide to sell your structured settlement or not is entirely up to you. You should should look at your situation and ask yourself some questions before proceeding.
- How badly do I need the money right now due to the accident or legal issue? Am I able to work, pay bills, and carry on with my job, etc.? If you can afford to accept the court-approved monthly installments, then do so.
- Will waiting on the funds cause an undue financial stress on me? If you answer 'yes' to this, then perhaps a structured settlement is a good option for you.
- Will I cause future financial strain if I sell my structured settlement? While you want to think about how having the money in hand will help you now, you also need to think about the potential financial strain on you later on if you have to pay back huge interest rates or legal fees. This is why it is important to make sure the structured settlement company you are dealing with does not charge legal fees or hidden fees which they do not tell you about. It's also a reason to consult with an attorney and make sure you know what you are getting into.
- Do I trust the company I am considering dealing with? This is very important.
- How will this affect my credit rating or credit report down the road?
You should find out the answer to all of these questions before you commit to obtaining a structured settlement, since it is a decision that you will be living with for a long time.
Should I Sell My Structured Settlement: Summary
If you decide that selling your structured settlement is for you, there are many reputable companies who handle this. Keep in mind, however, that there are also many who are not as reputable who may take advantage of you. Look into the companies you are considering dealing with, read the fine print, and have your financial adviser and attorney read it too. They can advise you on the terminology and can steer you to the best decision.
Finally, go with your gut. If you know that you need the money, a structured settlement loan may be the best option for you. Just look into the options before deciding as it is something that will be with you for a long, long time. The essence of this is you need to decide and weigh the value of having the money now, versus paying back a large amount of interest over time. Which would be the biggest financial burden to you? The answer to this question can be used to guide your decision on whether or not selling your settlement is right for you.
*I am not a lawyer and this post is not meant to offer any sort of legal advice. However, I do write for lawyers online, in addition to my other clients, and I have gathered the information from sources I came across in the process of writing on this topic in the past. If you need legal advice, talk to your attorney or find an attorney online that you trust to guide you.
Good luck in your decision, which ever path you take. Start by searching for structured settlement companies and go from there.
© 2014 Deborah L. Killion
Deb Killion is a well-known blogger and media content producer. All of her work including blog entries and posts are protected by copyright law. None of her work may be copied or reproduced in whole or in part without express written permission.