Sell a structured settlement
As we’ve seen in other articles in this series, a structured settlement may be inadequate to meet your financial needs. The question of the liquidation sale arises in this context.
You’ve heard that people do cash settlements. However, the wording of your settlement agreement may give a different impression. The restrictive wording would appear to prohibit any transfer of the agreement.
All of this could lead to confusion, at a time when you urgently need a lump sum of cash. In this article, we seek to eliminate confusion and explain the process of collecting your structured settlement.
You are not selling the Agreement
The settlement was an agreement between you and the insurance company (or another party). It is usually run to settle a claim you have made. If the insurance company settled the claim by purchasing an annuity on your behalf, the annuity itself belongs to the company. You can’t sell it.
On the other hand, the agreement confers a right on you, the right to receive a future stream of payments. This right to receive payments is your asset. Like any other asset, you have the right to sell this asset.
How is a structured settlement sold?
While you have the right to sell your right to receive future payments, the law makes it somewhat difficult to sell structured settlements. Such agreements and annuities are considered best for financial security for most people. Therefore, the law encourages such deals and discourages their sale for a lump sum of cash.
In such a situation, proceed as follows:
Consider what you want to use the lump sum cash for. You would have to explain how a lump sum of cash serves your interests better than a stream of payments spread out over years.
Find a buyer who specializes in buying structured settlements. Business firms known as structured settlement factors do this. We discuss the ratings of a good buyer at the end of this article.
Get a buyer’s quote to buy your settlement payments. Buyers often discount future payments to a “present value” and quote based on this value.
If you accept the quote, ask the buyer for a pro forma contract, showing the terms under which they would purchase your payments. Review it with your attorney.
Return the accepted proforma to the buyer. Reputable factoring companies would then check that the entire transaction is likely to be approved by the court and that all legal requirements have been met.
The company would then file an application in court for an appointment to review the transaction.
On the date set by the court, you will appear before the judge and answer questions about why you want to sell the deal. Other interested parties may also ask you questions. Explain to them how their interests are best served with a lump sum of cash.
If you deal with an experienced and competent factoring company, the liquidation sale will most likely be approved.
The factoring company pays you the agreed amount within a few days of receiving the court order.
Selecting a Structured Settlement Factoring Company
Make sure the buyer of your payments is: