Selling your structured settlement for a lump payment of money can be a good option for people who need to get their full settlement soon to pay off debt or are planning to use their settlement money for a large purchase instead of borrowing money and having to pay interest. You need to understand the way that your structured settlement it setup before you can sell it. You should also talk to several companies before selling your settlement because some companies will pay you a lower discount rate than others.

How Will I Use the Money?

Before you sell your structured settlement, it is a good idea to have a solid plan for how you will spend the money so that you don't end up spending it quickly and having no income. Some people sell their structured settlements in exchange for money to start their own business. Other people use the money to create a scholarship or endowment fund. It may make sense to sell a structured settlement to pay off your debts so that you don't have to pay interest any longer. If your debts are high-interest, you could save hundreds by paying them off completely.

How is My Settlement Set Up?

When a person agrees to receive a structured settlement, the money is put into an annuity that pays the recipient each month. Every state has different laws regarding settlements and annuity contracts, so it is essential that you understand the way your settlement is set up as well as the laws in your state before signing a contract to sell your structured settlement payment rights. Most states are have laws based on the Model Structured Settlement Protection Act but your state may vary slightly. To view each State's Structured Settlement Protection Act, click here.

Choosing a Company to Buy My Settlement

There are many companies that will gladly offer to purchase your structured settlement in exchange for a percentage of the entire amount. It is important to research the companies you talk to and make sure that they are reputable and are offering you a fair amount for your lump sum payment. Some insurance companies offer their customers options to cash out a structured settlement, so you may want to talk to your insurance company before talking to other factoring companies. Both Clearscape and All State are a good option for people who expect to receive a lump sum payment of less than $10,000.00.

A traditional factoring company is usually the best option for people who expect to receive more than $10,000.00 in their lump sum payments. These companies are usually able to offer a lower discount rate which means a greater lump payment for the selling party.