It is highly possible that you have already seen their advertisements on TV or have heard about them on your radio – finance firms that are eager to buy structured settlements or annuities or any other stream of regularly scheduled payments that you have. But should you sell your structured settlement to one of these aggressive advertisers? In fact, should you sell your structured settlement at all?
In simple terms, these settlement factoring companies will buy a portion, or all, of your structured settlement in exchange of a one-time amount of cash. Now, you may have a number of questions in mind, like why would these companies want to buy such settlements, or what is it that they would gain from doing so? In truth, they will get the exact same benefits as you would should you retain and not sell your structured settlement.
However, the advantage to you is that you can get a lump sum of money all at once! Here are a few facts about keeping, or selling, your structured settlement:
Tax Exemption – Contingent upon how the stream of payment is structured and decided by the court, the regularly scheduled payments may have limited or zero tax liability. In short, you may not have to pay any taxes on your structured settlement. But likely, you don’t have to pay taxes if you sell your payments either! Consult a tax professional to ensure you are clear on the tax liability before you sell.
Steady and Reliable Income – Finance firms are just the same as you are – they require money that they can depend on in order for their business to continue. A structured settlement annuity is actually one of the most dependable streams of income around, for you or them.
Healthy Return on Investment – When a firm offers to buy your settlement, they are not going to buy it at its full worth. This simply means that they are going to pay you slightly less as opposed to what you would have otherwise received should you decide to retain the settlement throughout its preset lifetime. For example, if your settlement is worth $100,000 for a span of ten years, then some of these companies may offer you, more or less, $80,000 to buy your settlement. This is actually where these finance companies make their earnings. It is kind of a win-win for both parties because you get a lot of money sooner and they still get a profit in the end.
A Major Decision
So as you see, these finance firms have many great reasons to buy your structured settlement payment stream. However, as was mentioned early on, the majority of these benefits are also applicable to you, and hence you need to carefully think it through if you are really eager to acquire that lump sum of cash right now. So, make sure that you do your homework before you approach any of these firms – consider your decision to sell carefully. When you do decide to sell, choose a company that is honest and communicates well with you.