Structured settlement is a financial arrangement in which a person receives his compensation in an injury case in the form of payments over a period of time. This is very different from the receipt of lump sum amount received in the form of compensation. Most common with injury related cases, structured settlements serve the purpose to pay an amount of money to the injured person over a period of time so that the beneficiary can meet any medical expenditure as well as maintain a certain standard of living.
The reasons why one would sell structured payments, and the manner in which it is done
Though structured settlements guarantee one with a lot of financial security but many people feel that despite the benefits, they would rather sell their structured settlement and settle for a lump sum amount. Rising costs of living, unemployment costs as well as rising educational expenses – all these are the various reasons why people would want to sell their structured settlement and receive a large amount instead of periodic payments over time. If a person wishes to do so the he or she contacts a funding company so that it can arrange a transaction of the legal nature by which the owners of annuities can sell a portion off or the entire structured settlement and receive a lump sum amount. However, before carrying out such a transaction he or she must take a look at a number of issues and consider them thoroughly before taking a decision.
1. The legal documentation associated with structured settlement agreement
Before selling his or structured settlement every person must make sure that all the documentation in relation with the original structured settlement is in order and in possession with the person. It is a very important task to ensure that every legal paper which proves that the structured settlement belongs to the aforementioned person and the amount of compensation that he would receive from it is gathered and arranged in order. In absence of any legal paper, any funding company can create numerous problems and deprive you of your rightful amount. It must be kept in mind that these are the papers which make you the owner of the structured settlement.
2. Determination of monthly inflow as well as outflow of cash
Before selling off your structured settlement you must make a proper and comprehensive list of the money which flows in and out of his or her account every month. This issue must be considered critical and with immense care since you are trying to determine the amount of money you would require every month to meet your expenses. If done wrongly, this may affect your entire future. While preparing of this list one must take into account every expense which he/she has to meet every month as well as any income which he/she has so that the net amount of money required by him or her every moth can be computed properly.
3. Take into consideration the future expenses
Another very important issue to be considered before selling any structured settlement is to lend some thought to the various expenses which would crop up in the future. One has to take into consideration the inflation rate as well to determine the amount since with passage of time the expenditure’s amount would increase as well. So be it educational expense or house mortgage payment or car loan payment one has to take into contemplation every future expenditure that he is planning to make and accordingly take a decision as to whether he wants to sell his structured settlement and receive a lump sum amount or is he better off receiving a periodic payment over time.
4. Finding a reputable firm
The next issue which must be considered by a person wanting to sell is structured settlement is to find a good and reputable firm that would not cheat him off his money. There are many fraudulent firms who would simply take away your money from you and leave you with less than what your right is. So it is very important that a proper research be conducted and then the firm be chosen.
5. Understanding the terms and conditions
This is probably the most important issue of them all as if you fail to understand any terms or condition you might lose money. It is highly essential that one makes it a point to understand every term and condition enlisted in the selling agreement and be sure that he/she is comfortable with them. In any case if he does not get any particular detail he must call upon the firm and ask them to make it clear for him or her.
After contemplating all the issues mentioned above one must keep in mind that the selling process of a structured settlement would take on an average 60 to 90 days but in some circumstances it can even take longer.