How to sell your monthly settlement

Should there be a time when life’s circumstances change and you need a large amount of cash, you can exchange your monthly settlement payouts for a lump sum. Nowadays, there exist many companies that offer to buy monthly settlements in exchange for a lump sum payout. This gives you, as a prospective seller of a structured settlement, more options and thus a chance to get a better deal for your settlement payouts. 

While still not the best option for monthly settlement recipients, the sale of structured settlement payouts is now safer since it is protected by law. The U.S. Congress enacted a law in 2002 that requires a court order to authorize the sale of such settlements. Thirty-eight states now abide by this law. This makes selling your monthly settlement more secure.

In this article, we’ll tell you how to go about selling your monthly settlement for cash.

First, do some number-crunching. Grab a calculator and determine a buffer amount to take care of the fees and charges needed to jumpstart the process of selling your structured settlement payout. Also figure out what expenses coming from the sale of your monthly settlement need to be met immediately. Remember that you must pay a considerable amount to gain access to your money now instead of waiting for each monthly payout.

Second, get your documents in order. As with any legal transaction involving big money, a lot of paperwork will have to be done before you can sell your structured settlement and get that one big payout. To help save time it takes to do all that paperwork, ensure that all documents relevant to your settlement are in your hands. It is also necessary to have several copies of these papers. You’ll need to contact your attorney, the company that settled your case (if you got your monthly settlement from settling a claim), the company that is responsible for paying out or managing your monthly settlement payments, or the broker that assisted you during the settlement.

Third, seek the help of an expert. To make sure that you don’t miss out on any financial considerations of selling your monthly settlement, consult a trusted advisor – an accountant, attorney or financial planner. Since they are conversant with estimating future losses and financial needs, experts are a lifeline you must cling to in deciding your next move. They may also recommend other options for you to get the cash that you need without foregoing your entire monthly settlement.
 
The plain truth, you see, is that selling off a structured settlement is a rather drastic option. Consulting with an expert can open your eyes to some of the potential pitfalls of selling your settlement, such as:

•    Nobody will pay a lump sum that is equivalent to the actual market value of the annuity; therefore there will be an inevitable financial loss by ‘cashing it in’ early.
•    A large amount of cash (as opposed to smaller payments received over a long period of time) is more prone to being spent unwisely.
•    You expose yourself to the risk that the company buying your settlement payouts is not on solid financial footing, or that they are unethical. They may try to lash back at you if they encounter any problems collecting your monthly payouts.

Fourth, procure the services of a broker. In addition to a financial advisor or attorney? Yes. Although it’s an additional expense, it’s a necessary one. A broker specializing in the sale of settlements will take you through the entire transaction. Make sure you investigate your broker’s experience and professional background. Inexperienced brokers who are just licensed after a short course won’t cut it. Look for years of experience and back it up with checking out his past client references.

Fifth, scour for a buyer. And don’t just look at one or two or even three offers. Really shop around! Even if you need the money in a short period of time, it pays to spend time and effort to scrutinize and compare your options. Don’t take the first offer, and compare at least several offers to get the best deal for your settlement.
Sixth and finally, secure court approval. Some states do not allow the sale of monthly settlements.

Even if selling monthly settlements is allowed in your state, the sale must still be approved in court. This can take up to 90 days, as the judge must scrutinize your need as well as your prospective buyer.  He must likewise establish that your financial need is genuine and cannot be addressed by any other course of action. And most importantly for you as a seller, a judge will determine the legality and funds of your buyer.
  

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