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Things to Avoid When Selling a Structured Settlement

Selling a structured settlement allows you to get your money out of it quickly. This means that, instead of several years of payments, you get your entire lump sum in one payment. There is also the option to get a portion of your payments, but not the full amount, which allows you to resume your payments when your obligation to the buyer is fulfilled. Here are some things you should avoid if you’re going this route, because it is a big decision and you want to make sure you’re making it wisely.

Don’t Go Overboard

Plenty of people want to sell a structured settlement, but they do not need to take the entire thing. Remember that this is always an option and, further, that it is a very good option if you don’t need the entire sum of your settlement in one payment.

An example of this—and a common one—would be getting money to pay for college. Instead of paying interest on student loans, some people with settlement money to which they are entitled choose to take a lump payment on whatever portion of it would cover their tuition. You can do this to reduce or eliminate your costs, particularly the costs associated with borrowing over the long term.

The structured settlement payment, if you have a large settlement, however, need not be the equivalent of the entire settlement. Consider taking a portion so that you still have income left after you’re out of college and so that you minimize your fees. It’s a good way to use this service.

This applies to most any scenario involving taking money out of a structured settlement. If you just need a bit to catch up with bills or to cover an inevitable cost, go ahead and take that sum instead of taking everything out.

Don’t Overthink the Long-term

This may sound counterintuitive when you’re thinking about money, but thinking in the long term can make it seem like taking some or all of your structured settlement as a lump payment is not a good idea when this isn’t the case.

When you’re slated to get payments over a series of years, decades or even your lifetime, remember that the fixed amount of the payments may not really keep up with inflation. This is one of the reasons that people sometimes choose to take their settlements and sell them if they can, because they don’t want to fall victim to inflation. Remember that money is wealth and, even though you may be entitled to a certain amount of money, it doesn’t mean that the money will remain the equivalent of the same amount of wealth it was worth when you were first awarded the settlement.

If you have doubts about whether selling your structured settlement makes sense in the long term, consider talking to a financial planner about the matter. They’re very good at determining whether these types of strategies make sense for their clients.

Don’t Take too Little

Remember that you may have to go to a hearing to get your sale approved, particularly if your settlement has language that prohibits selling it. If you go in front of a judge, it’s much better to make sure that you’re asking for enough to cover whatever need has manifested.

It’s better to ask for as much as you need rather than to have to go through the entire process again. Keep in mind that it can take 6 weeks or longer for the courts to process these requests, so you should make sure you take care of everything the first time you ask to sell your settlement.

Don’t Worry About Default

If the person who is paying your settlement defaults after you have been paid the lump sum, you’re not at risk. It’s important to keep this in mind and, in fact, it’s one of the real advantages of selling a structured settlement rather than waiting for it to pay off over a series of years. You are, to some degree, putting the risk on the buyer and taking your money in one lump, which means that you’re involvement with the settlement, is over, unless you haven’t taken then entire amount.

Remember It’s About You and Your Needs

There is a lot of advice that will recommend for and against taking your structured settlement and selling it. This is all well and good, but this advice is all based on hypothetical situations, of course, and the advice may not really apply to what’s going on with you.

Trust your instincts on this. If you feel that taking a part of the settlement and using it to pay off debts or to handle a crisis is sensible, then go ahead follow your instincts. If you feel like you need to wait awhile, remember that you don’t have to accept a quote and there’s no risk in simply seeing what would be involved in selling your settlement.

Know the Terms When Selling a Structured Settlement

When you get an offer, be sure you read it carefully. A financial decision that turns out well when you weren’t fully aware of what was involved is just a lucky decision, not a good one. Don’t rely on luck. Read all the terms and conditions and understand what you’ll walk away with if you take the lump sum.

If you’re interested in learning more, look around the site and you’ll find plenty of information available to peruse. There is also a lot of great information about selling structured settlements available online and in other venues, so be sure to consider everything that’s available thoroughly and make your decision from a position of knowing your goals, what strategies you intend to employ and how selling your structured settlement can play into all of that. You have options and selling off your structured settlement and freeing up the cash that may have taken years to receive in full might be one of the best ones of all.

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