Friday, March 21, 2008

When Not to Sell a Structured Settlement

Filed under: Structured Settlements — Structured Settlements Pro @ 2:27 pm

Structured Settlements are set up to take care of an injured parties financial needs overtime. Often the injured party is not able to work or generating regular income. The structured settlement provides income to pay bills and living expenses.

While the majority of all structured settlements remain intact throughout the intended term there are times when a recipient may need a larger sum of cash. In these cases one can opt to sell some or all of their future payments for a lump sum of cash. Those that are in need can turn to a structured settlement purchaser that will buy their future payments in exchange for the needed cash.

However, there are some instances where a recipient needs cash but would be better off not selling their structured settlement.

1. Rely on payments for everyday necessities: If your structured settlement is your only source of income and is only enough to pay for bare daily essentials then it is recommended that you keep your future payments in tact.

2. Too few payments remaining: If your future payments are set to expire in the coming 12-24 months it rarely makes sense to convert those to a lump sum payment.

3. Payments are too far out (over 30 years): For example, if you are receiving future payments that stretch over 40 years you are able to sell the first 30 years of payments but not the last ten. The future value of money will discount these payments to a level that is too difficult to predict or make a fair market value exchange.

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