Should You Sell Your Structured Personal Injury Payout?

A personal injury payout can be awarded as a lump sum or in a structured settlement. Larger settlements or settlements that are to be administered by a trustee are usually paid through a structured settlement. A structured settlement is paid over time, similar to an annuity. However, there are companies that will purchase a structured settlement and pay you a lump sum in exchange. 

The Downside to Selling Your Settlement

The downside to selling your structured settlement is that it is rare for you to receive the full amount of your settlement. The company purchasing your settlement must wait for reimbursement according to the original terms of the settlement. Because of this, the company will offer you less than the total amount you are actually entitled to. Therefore, while you will be receiving a lump sum of money, it most likely will not be the full amount that you have been awarded.

Loss of Interest Income

Structured settlements are desired by the company needing to pay an injured party because it allows the company to earn interest on the award money. Sometimes, all or a portion of this interest will be awarded to you as an incentive to accept the offer of a structured settlement. Selling your structured settlement means that you would lose out on this interest income.

Increased Pressure to Spend Wisely

Selling your structured settlement requires you to administer the funds responsibly. A lump sum, once spent, is not replaceable or able to be extended, meaning that if you spend the entire amount you have no recourse. Prior to selling your structured settlement, you may want to discuss possible tax repercussions and obtain financial advice from a financial adviser.

Eliminating Economic Difficulties

The benefit of selling your structured settlement means that you will have funds available to get yourself out of debt and support yourself if you are currently experiencing economic difficulties. The ability to be debt free can outweigh the fact that you are eliminating your future ability to rely on these funds. However, note that this is a one-time fix to your problems; should you find yourself in trouble again in the future you will not have the same option available.

Eliminating Possible Bank Failure

Selling your structured settlement also eliminates the possibility of your funds disappearing if the bank or insurance company responsible for your payment goes defunct. While unlikely, bank failure is always a possibility.

Getting Legal Help

While you may want to sell your structured settlement, doing so may not be easy or even possible under the terms of your settlement. Prior to beginning the process of selling your structured settlement, speak with an attorney regarding the specifics of doing so.

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