What Is the Process of Selling Your Structured Settlement?

A structured settlement is a financial arrangement typically awarded to plaintiffs in personal injury lawsuits. Instead of receiving a lump sum, the settlement is paid out over time through periodic payments.

While structured settlements provide long-term financial security, some recipients may prefer to receive a lump sum. In such cases, the option to sell structured settlement—either in part or in full—becomes an appealing solution. Below is a step-by-step guide to the process.

  1. Assess Your Financial Needs
    The first step is determining how much money you need immediately. Keep in mind that selling your structured settlement typically results in receiving less than the total value of the future payments. This is because the company purchasing the settlement will charge fees and make a profit, often reducing the payout to 60-80% of the total value. Therefore, many people opt to sell only a portion of their settlement.

    It’s essential to carefully consider your needs. Selling too little might require you to restart the entire process, which involves more fees, legal work, and time. Additionally, a judge may not approve a second sale request.
  2. Gather and Compare Offers
    Next, seek offers from several factoring companies that buy structured settlements. Getting quotes from multiple companies ensures you can choose the most favorable offer. Be sure to research each company’s reputation and ask for a detailed breakdown of all fees and expenses associated with the sale.
  3. Evaluate and Choose an Offer
    After reviewing the offers, compare them based on your needs, the company’s reputation, and the final payout amount. Read the fine print, ask questions, and review online reviews and testimonials. Once you’re satisfied, select the company you’d like to work with.
  4. Complete the Paperwork
    Once you’ve made your decision, the process begins with submitting two forms of ID and completing an application. You’ll also need to provide copies of the original structured settlement agreement and the annuity policy. These documents are necessary for the factoring company to buy your payments.
  5. Request an Advance (If Needed)
    Since the sale process can take up to three months, you can request an advance from the factoring company to meet immediate financial needs. Some companies offer advances to help bridge the gap until the lump sum is paid.
  6. Obtain Court Approval
    A judge must approve the sale to ensure it’s in your best interest. The factoring company will prepare the necessary paperwork for this court hearing. The judge may ask questions to assess whether the sale is suitable for your financial situation. If approved, the structured settlement administrator must receive the court order.
  7. Receive Your Lump Sum Payment
    Once the court approves the sale, you’ll receive your payment, typically within five business days. Note that any outstanding obligations, such as tax liens or past-due child support, will be deducted from your lump sum.

Selling your structured settlement may provide immediate financial relief, but it’s crucial to weigh the pros and cons carefully before proceeding. Consider consulting with a financial advisor or attorney to ensure it’s the right decision for you.