Structured Settlement Loans
What you Need to Know About Getting Cash by Selling Your Structured Settlement
You may see advertisements online stating things like “get a structured settlement loan” or “get cash for structured settlement.” While it is possible to get money for a structured settlement, it is important to know how structured settlements actually work and how to sell a structured settlement.
Structured settlements are payments set up with a defendant or insurance company after a lawsuit settlement. Typically, insurance companies use structured settlements to pay for cases related to personal injury, car accidents, medical malpractice, and wrongful death.
Sometimes, structured settlement payments may be too small for you to cover basic expenses or live comfortably. In cases like this, selling your structured settlement payments may be your best option.
What Does It Mean to Sell My Structured Settlement?
When a funder buys your structured settlement payments, they give you a lump sum in exchange. Your payment schedule doesn’t change, and the payments you would receive go to the funder instead.
For example, if you receive a structured settlement payment monthly and decide to sell 6 months of settlement payments, you will get the value of those 6 payments as a single lump sum. Then, for the next 6 months, the funder receives your structured settlement payments.
What are the Common Reasons Why People Choose to Sell Their Structured Settlement?
People choose to sell their structured settlements for a variety of reasons. Instead of waiting months or years for the money promised to them, they can get cash sooner without taking out a traditional loan. Since you don’t have to pay back a structured settlement loan, there is little to no risk selling structured settlement payments.
Many choose to get a cash advance for their structured settlement to fund living expenses, pay off debt, buy a home, and more.
Paying Medical Bills
Just a few days at a hospital is expensive. In addition, people who settle injury or medical malpractice cases most likely need ongoing care for their injury. Instead of taking out loans for medical treatment, many people sell their future structured settlement payments.
Paying Back Debts
After a lawsuit, many people might have extra loans or credit card debt, especially if their lawsuit was due to injury. If you cannot make the minimum payments on these debts, selling your structured settlement is a good way to pay off some or all of your debt.
Paying for College
According to CNN Money, the average college student graduates with more than $30,000 of student loan debt, with most paying $300 per month for 10 years. You can use a lump sum from selling your structured settlement payments to pay for you or your child’s college expenses. You can also use the cash for your structured settlement to go back to school.
Purchasing a Home
This is one of the most common reasons people get cash for a structured settlement. They usually use a structured settlement loan to make the down-payment on a new house or renovate their current home.
Starting a Business
While not the most common choice, some people choose to use their structured settlement loan to start their own business. With a good business plan, a lump sum from selling structured settlement payments can turn an idea into a reality.
What is the Process for Getting Cash by Selling my Structured Settlement?
The process for getting a cash advance from your structured settlement loan depends on how you sell the payments. However, there are only a few steps.
#1: Provide Information About Your Settlement
During this process, you should explain who is sending you payments and how often you receive them. You can also discuss your financial need for the lump sum and how you will use it.
#2: Choose Your Sale Option
There are usually a few sales options available for your structured settlement. At this stage, you decide how much of your settlement you want to sell and how much the funder can offer.
#3: Complete Paperwork
Once you agree to the funder’s offer, they send you a purchase contract. They also ask you to send them documentation about your settlement including a copy of your annuity contract and settlement agreement.
#4: Get Court Approval
A judge must always review the sale of a structured settlement. Their job is to ensure the sale is in your best interest. Typically, the funder submits a petition with a court near you for a hearing.
#5: Receive Your Money
Once you sell your settlement to a funder and the court approves the sale, you’ll get a cash advance for your structured settlement from the funder. If you sell all remaining payments of your structured settlement, you get a lump sum and stop receiving settlement payments altogether.
However, if you sell a certain number of payments from your remaining settlement, you receive a lump sum and the life of your settlement is deducted by those payments. For example, if you have a 20-year settlement and decide to sell 2 years of payments, you will receive a lump sum and continue to receive payments for the next 18 years.
If you only sell a portion of each payment, you receive a lump sum and continue getting payments for the entire life of the structured settlement. The only difference is that your payments will be lower, since part of the payment goes to the funder.
Do I Need Approval from my Attorney to Sell my Structured Settlement?
In most states, you do not need approval from your attorney to sell your structured settlement. Some states require you to consult with a professional advisor when selling your structured settlement. In any case, you need approval from a judge. When selling your structured settlement payments, the funder sends you paperwork to fill out and return.
After completing the paperwork, the funder helps you file a petition for a court date. In court, the judge will ask why you need a lump sum instead of smaller payments. If the judge approves the sale, the funder sends the money to your bank account or sends a check in the mail.
Will I Get the Full Value of the Payments that I Sell?
Each structured settlement is different. In most cases, funders must determine the time value of money that they give to you and receive from your payments. The time value of money is why most loans carry interest. Since the value of dollar changes constantly, you often won’t get the full value of the structured settlement payments you sell.
Can I Sell Just Some of my Payments, or Do I Have to Sell Them All?
You do not need to sell all of your payments. In fact, most people only sell a portion of their future structured settlement payments. When selling your structured settlement, you have a few choices. You can:
- Sell some of your payments;
- Sell a portion of each of your payments; or
- Sell the rest of your remaining payments.
For example, if your structured settlement pays you $1,000 per month for 10 years, you can sell the last 5 years of payments. Alternatively, you could sell all 10 years of payments or just half of each payment.
In cases where you sell a portion of each payment, you continue to receive payments over the life of your settlement in addition to a lump sum. For example, if you sell $300 of each $2,000 payment, you will continue to receive $1,700 per payment while the funder receives $300. This is in addition to the lump sum the funder offers you.
How Long Will It Take to Sell my Structured Settlement Payments and Get Cash?
This depends on a lot of factors. Once the court approves a structured settlement sale, the funder usually sends a payment within three business days.
However, most structured settlement transactions take anywhere from 60 to 90 days from the time that funders receive your completed paperwork.
Talk to a Structured Settlement Sales Consultant at Nova Today
Our friendly and professional staff are standing by to answer your questions about selling your structured settlement.
We invite you to contact us online or call 800-760-0703 to speak with a live representative. Our staff is available 24/7 to answer your questions about getting a loan against your structured settlement.