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Is It the Right Time to Sell a Structured Settlement?

Selling your structured settlement might be a good idea, depending upon your circumstances. With any financial decision, there is always a right and wrong time and, sometimes, it’s hard to tell which may be the case. Here are some of the things you can think about when you’re trying to determine whether or not you want to sell your settlement.

Do You Need All the Cash?

The first question you should ask yourself is whether or not you need all the cash in your settlement. If not, you do have the option of selling part of your settlement and resuming your regular annuity installments after you’ve squared up with the buyers.

If you don’t need all the cash out of your structured settlement, this changes the equation a bit. You’re not giving up the security of regular payments, at least not for the long term, so the decision is a bit easier to make. Do you need the money you want right now or could it wait? Is there more benefit in paying whatever debts you want to pay off with that money or is there more benefit in keeping going with the annuity payments as they are?

Only you can answer these questions. There are some reasons that people commonly choose to sell their structured settlements detailed in the section that follows and these apply to the decision making process detailed in this section, as well. You should consider them when you’re deciding to sell off part of your annuity payments.

You Need All the Money

If you do need all the money, there’s probably a good reason for it. You may have realized that you could actually save some money by taking cash out of your settlement payments and applying them to existing needs right away. Some of the reasons that people do this include:

  • High interest credit card debt
  • Long-term debt—student loans, etc.
  • Rescuing a mortgage
  • Paying for a car
  • Paying for school in advance

There are many other reasons that people opt to do this. They may decide that, upon looking at the issues, there is good reason to go ahead and sacrifice the bit of money they’ll loose on fees for selling their settlement. For instance, if you have over $10,000 in credit card debt, the amount you’ll save by paying it off in one shot versus the amount you might lose by selling your settlement could demonstrate that getting rid of the credit card debt is the best possible move.

There are plenty of other reasons that people sell their settlements. Sometimes, it’s because of medical expenses. These costs—particularly if you don’t have insurance—can bankrupt people and having the money there to pay it off right away can end up saving you financially. This is a decision, however, that you have to make carefully, even if you’re making it under stressful circumstances.

What About the Lost Payments?

Getting regular payments from a settlement can be very comforting. If you lose your job, you still have the payments. If you have unexpected expenses, you can pay for part of them with your payments. There is a lot to be said for getting this money and, no matter how difficult the ordeal was that ended up with you getting a settlement, these payments can be great sources of peace of mind. When you sell your settlement, you will, at least for a time, lose this security. This isn’t a total loss, however, and it may actually be a net plus.

The fact that structured settlement payments come in on a regular basis makes people feel secure. The payments, however, may be legally enforced but they are not guaranteed. There’s always a chance that the person who is responsible for paying them will fail to do so for whatever reason and that those payments will stop altogether.

One of the advantages—the marked advantages, really—of selling off a structured settlement is that the buyer assumes the risk as far as the payments no longer coming through is concerned. Once you sell the settlement, you have your cash and you’re out of depending upon those payments for good, unless you sell off only part of your settlement.

Is Now the Time to Sell a Structured Settlement?

This is always a debate. Whether or not it’s a good idea to sell your settlement is partially dependent upon the timing of the issue. If you’re in college, depending upon the payments to see you through as far as rent and groceries go and you don’t really trust yourself with a huge sum of cash, you very well might want to wait. Then again, if you want to make sure you don’t pay a dime of interest on any loans related to college and you want to have the entire matter settled financially so that you can concentrate on studying, you might want to sell the structured settlement right away.

Likewise, if you feel that you can handle your bills due to a medical incident and you want to keep those payments rolling in on a regular basis, you may want to keep the settlement as it is. If you feel that it would be beneficial to have the money all at once and to get rid of all your bills, you may want to go the route of selling it off.

Be responsible to yourself in this regard. Think about what the best course of action is and do the math to back up your decision. If you see a real advantage in selling off your structured settlement, you may want to get the process started so that you can get the money as quickly as possible. Remember that you can do this at any time, so if the issue really comes down to one of timing more than one of whether or not you should or should not sell at all, waiting for the best possible time to sell off your settlement rather than doing it on impulse may be advantageous.

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