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You have probably seen all the TV ads offering cash in exchange for structured settlement annuities. Cashing in a structured settlement is a great way to give yourself a quick cash boost. However, since structured payments are a nearly guaranteed, tax-free income source, the decision to sell should not be made lightly. In this article, I will explain to you what structured settlements are, how they work and whether you should sell yours or not.

What is a structured settlement?

Put simply, a structured settlement is an agreement between two parties (normally a plaintiff in a civil court case and an insurance company) that outlines how your settlement is going to be paid out. In most personal injury or medical negligence cases, these payments consist of two parts: a lump sum of money paid up front to cover legal and medical fees, and a set of periodic payments which are meant to ensure that the plaintiff has enough money to cover his long-term care needs.

Because the state prefers that people get paid using this structure, most structured settlement payments are not subject to income tax. This structure is very beneficial in instances where the plaintiff has suffered from serious injury and won’t be able to work and/or support himself for many years.

With that said, some people do not like the idea of having to wait around for payments to come through one-by-one over many years or perhaps even decades. This is especially true in cases where the plaintiff has other existing financial commitments, such as unpaid bills or debts.

Cash in your settlement

All structured settlements are permanent and cannot be changed or renegotiated once both parties have signed the papers.  This permanent nature of structured payment contracts makes it impossible to extract money out of your settlement, should you ever need it. For this reason, a whole market of selling and buying structured settlement agreements for cash has emerged. There are many companies looking to acquire structured settlements from people. Here’s what you need to know when looking to sell:

1. Every sale must be approved by court. This means that you must present a good reason for needing the money, and know exactly how much money you are going to need. Most judges don’t allow people to cash out more than what they need to cover their immediate financial needs.

2. Some structured settlements are subject to various legal limitations. Get in touch with a company that specializes in buying settlements for cash to find out more.

What are you waiting for?

The structured settlement process doesn’t have to be difficult if you’re working the right company. After all, it’s your money right? Most people who’ve thought about taking cash in a lump sum from the structured settlement often don’t look at the value of taking action TODAY.

There are many reasons why you might be in a stronger financial position if you consider receiving your money in a lump sum. Most important, everyone’s financial situation is different so don’t think that you might not be in a position to qualify. What do you have to lose? To learn more about structured settlement benefits please check out all of the resources we’ve made available.