If receiving payments from a structured settlement is no longer working for your finances, then it might be time to consider selling your payments. While structured settlements are strictly regulated, that doesn’t mean that selling your settlement to a buyer will impact you negatively – in fact, it might be the key to achieving your financial goals. Here’s how to go about selling your structured settlement.
To sell your structured settlement payments, you need to obtain permission from a judge under the Structured Settlement Protection Acts. These laws are designed to protect you from unethical buyers, so a judge must consider the terms of the potential sale.
The judge will consider some of the following factors:
• Your current living expenses
• Future financial obligations
• Your life expectancy
Getting a sale approved by the court takes anywhere between 45 and 60 days.
How Much Is My Settlement Worth?
While this sounds like an easy question, it’s a bit more complicated than it looks. Technically, your settlement is worth the present value of the contract, but that’s not how structured settlement buyers see it.
The amount you’ll get from selling your structured settlement is calculated using a formula that considers the future value of your payments and subtracts any growth potential that the company loses because they don’t have that money immediately. The result is your “discount rate” – the percentage that the company will charge for the risk associated with receiving future funds. This rate will usually be between 9% and 20%.
If you’re curious how much you will actually receive, consider using a structured settlement calculator.
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