Using Future Payments to Satisfy a Specific Need Now
Would you rather receive more money or less money for something you own? The answer is easy, you would always prefer to get more..
But there are exceptions to most rules – including this one. Life changes or pressing financial needs may cause people to sell all or part of their right to receive payments from a structured settlement for less money than the future payments add up to.
A structured settlement is one in which an individual receives cash payments over time in the form of an annuity. This payments commonly result from a successful lawsuit for medical malpractice, wrongful death, or some other kind of personal injury.
When you opt to receive all of your settlement money at once, there are many financial advantages. Some people choose to invest in a business opportunity, or perhaps enroll in a school to earn a degree. The cash can come in handy in paying medical bills that would otherwise pile up without the ability to settle related debts. If the total amount is enough it may even be possible to buy a home.
However, it’s important to remember that selling your future payments to satisfy a specific need now does mean getting less money than you would otherwise receive over time.
For that reason it’s a good idea to shop around by getting quotes from multiple buyers of structured settlements; this will make it possible for you to find the most substantial offer in order to receive the most cash to settle any debts or financial needs you have. It is also helpful to understand that factors such as your credit card debt do not affect what you can receive from a structured settlement buyer for your future annuity payments.
While exploring the various options that are available, it is also important to understand how structured settlement buyers determine the amount you will receive. For example, a settlement can be in the form of monthly installments due over 10 years, but when you sell the future payments for a lump sum they are worth less in today’s dollars. The due dates for payments, the discount rate, or other factors such as financial liens affect the ultimate present value of the settlement.
Selling a structured settlement in full is not always the best option, but for urgent financial needs selling your future payments can be the best option. You should always consider alternative sources for raising a lump sum such as a bank loan or home equity loan.