If you are reading this, chances are that you have won a personal injury lawsuit¹ and received a handsome award. There is also a chance that you have decided to receive it as a structured settlement.
In a structured settlement, the involved parties (the plaintiff and defendant) may negotiate a financial agreement in which the plaintiff agrees to receive the winnings in the form of periodic payments over a fixed number of years.
While a structured settlement is beneficial, circumstances may change and you may therefore require a lump-sum to fund important projects such as starting a business, paying college fees, repaying debts, and even renovating your home.
In such a case, you might want to consider selling part or all your future payments to a qualified buyer in exchange for a lump-sum.
A Step-by-Step Guide on How to Sell Structured Settlement
When it comes to selling a structured settlement, a certain procedure has to be followed. The procedure itself is pretty straightforward.
Step 1: Determine if your Settlement is Eligible for Sale
Now that you’ve made the decision to sell your settlement, the next step is determining whether it’s eligible for sale or not.
This is important because some states restrict such sales since they are subject to state and federal laws, which may require a court approval before selling.
If you have no idea whether your structured settlement can be sold or not, it’s advisable to seek the advice of a good structured settlements purchasing company.
Step 2: Shop Around for a Buyer
The next step is finding a qualified buyer which in this case, the buyer is a structured settlement purchasing company.
Different companies offer varying discount rates where the discount rate is the lump-sum reduced by a factor of the projected interest earnings.
It’s advisable to request quotes from at least 2-3 companies before settling on one. It’s also important to only choose a company that has a solid reputation and works with great integrity.
Once you select the right buyer, then you can begin the negotiation process.
Step 3: Negotiate a Reasonable Amount
With the right buyer at hand, the next step is kick starting the negotiation process. Before the negotiations however, there are a few things you must take into consideration like;
- The amount of settlement you intend to part with.
- The total amount of payout the buyer is willing to offer.
- The difference between the actual payout you will receive from the company and the total amount you will receive with the regular payments.
Your main aim here is to take home as much payout as possible. If you feel the total payout being offered is too low, you can continue shopping till you get the amount that you deserve.
Step 4: Seek a Court Approval
As a stated earlier, sale transactions for structured settlements are subject to state and federal laws. Therefore, should you decide to sell part or all of your future payments, the sale must be approved by the court.
Your personal injury attorney will file the necessary documents with the court and a hearing will be scheduled.
In the court, you will be required to provide a legitimate reason as to why you want to sell your settlement and how you plan to avoid putting your financial future at risk.
Step 5: Cash your Payout
You have followed the right procedure and the judge has approved the transaction. Now all that is left is cashing out your payout.
An order will be sent to the purchasing company with a request to send the agreed funds to your account.
Usually, it takes around 45 days to get the funds in your account, although different states have different policies regarding this period.