Sell Structured Settlement for Cash

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What is a Structured Settlement?

Structured Settlement is an arrangement where a personal injury victim receives periodic and tax free payments over a given duration of time as opposed to a one time taxable lump-sum. There are many advantages associated with this arrangement and most claimants opt to go with the structured payments options. Changes may however occur along the way and a claimant may need to get a lump sum to start income generating projects, pay for education, clear accumulated debts that may end up in bankruptcy proceedings or take care of other pressing financial obligations. Where this is the case, claimants can sell their structured payments to access a lump sum as opposed to getting periodic payments.
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How to sell structured payments?

The process involved in selling an annuity or a structured settlement is quite straightforward. You should however take your time and go through all the necessary steps in order to access your money. Below are five important steps that you should take when selling your structured payments.

1. Making the decision to sell

The decision to sell your structured payments should be backed by a valid reason. This decision will to a large extent affect your financial position both in the present and in days to come. You should therefore consider all options and ensure that the decision to sell is the best option considering prevailing conditions and your financial future.

2. Getting a funding company

Your next course of action should be to get a reliable funding company to buy your structured settlement. Shop around for the best deal you can get where selling your structured settlement is concerned. To ensure that you get a good deal check the different companies' rating on the Better Business Bureau and also consider the company experience in completing the settlement transfer process. Avoid dealing with a broker at all costs and go for the company that has your best interest. Other points to consider include how reputable a company is and how it handled similar settlements in the past.

3. Starting the sale process

To start the sale process, you need to submit all the necessary paperwork to your funding company of choice. The paper work generally includes the annuity policy and a settlement agreement among other documents required by the funding company to verify payments and facilitate the settlement transfer process.

4. Getting a sale approval from the judge

Once all documents relevant to the sale have been signed, the documents should be filled with the court by a local attorney. A hearing is then scheduled where you are required to ascertain that your decision to sell your settlement will not in any way put the financial of your family in jeopardy. A sale request will in most cases be approved by the judge unless there are problems with the transfer request.

5. Getting your money

Once a judge has approved your request, an order from the judge is sent to the insurance company to wire your funds.
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How long does it take to sell your structured payments?

Once you have signed all the relevant documents with a funding company, you should expect to receive your money in about a month and a half. State laws governing such sales however differ and these to a large extent dictate your waiting duration as all legal processes have to be followed and adhered to. In some instances, you may qualify for an immediate cash advance to take care of urgent financial obligations.
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What is the discount rate of selling a structured settlement?

Different funding companies have different offers when it comes to purchasing your structured settlement. The companies purchase the settlement at a discounted rate and different companies will have different discount rates. The discount rate will also depend on the total amount of your resettlement payments and how many payments you wish to sell. Most companies charge a discount rate of between 8-18% with most companies falling somewhere in the middle. Some companies may however charge a discount of up to 30%. A reasonable rate should be about 12% or less.

Is the money you receive after selling your structured payments taxable?

The money you receive as a lump-sum is treatment just like your structured payments which are tax free. This is in line with the Tax Relief Act of 2001 (H.R. 2884). This legislation also made it mandatory for people willing to sell their structured settlements to do so in accordance to the set state laws and get a court approval before the sale is completed.

Your lump sum payment as opposed to casino earnings and or lottery winnings is not taxable. Once the initial tax charged on the lump-sum is deducted, no extra tax should be charged. If however taxes are charged on regularly as opposed to the one-time tax charged on the lump sum, you will have to pay tax on the money you receive once you sell your structured payments.
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Anti- assignment provision

An anti-assignment provision is designed to prevent contracting parties from transferring obligations without getting permission and a written consent form the other contacting party. An anti- assignment clause prohibits transfer of assignments to the other parties. Many variations of the clauses exist but the bottom line is the prohibition of agreement transfer to other parties without permission. The clause however only applies in voluntary assignments and does not is not applicable where a court order is involved.

Deferred annuity

A deferred annuity is a contract that delays annuity payments either in lump-sum or installments until an investor elects to receive the payments. A deferred annuity is normally created when an insured party pays a single premium to an annuity company. The premium is later distributed to the insured party over time.

A deferred annuity has two main phases, a savings phase and an income phase. During the savings phase, money is invested into the account and in the income phase, the payments are received after converting the plan into an annuity.
A deferred annuity is not taxed during the savings phase and taxed are only charged once the income phase starts.

As deferred annuities are designed to act as retirement savings, an extra 10% penalty tax may be charged above the ordinary income tax if the principal and earnings are to be withdrawn before the age of 59.

Deferred annuities can either be fixed or variable depending on the way the investment is made.
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We have put together a well-researched list of well companies that offer legitimate services where structured settlement is concerned. While we have done our best to provide quality content, the content is in no way a substitute for individual legal advice. The content is generally meant to provide some simple answers to some of the common questions most people ask about settlement and annuity payments.