What is a structured settlement?
A structured settlement is a legal agreement in which an individual agrees to receive periodic payments from the damages awarded as compensation for personal injuries, instead of receiving a lump sum. In some cases, this method can allow the injured party to obtain financial assistance without having to worry about putting their money into investments that might be subject to excessive risk or loss of value over time.
At the end of the agreed-upon payment period, which is usually determined by a judge, any remaining funds may be used for investments in addition to being released for unrestricted spending.
Typically, structured settlement agreements are arranged through legal channels between lawyers representing both parties in a lawsuit. However, some defendants can arrange these deals directly with the plaintiff during mediation.
In both cases, a third party is needed to help facilitate the transaction and ensure that all parties involved adhering to the agreed-upon terms of the settlement. Most of the time, this responsibility falls on an assignment company, which generally takes 7% of the total payout.
The benefit of using an assignment company is that it helps protect both parties involved in the transaction by ensuring you receive timely payouts while helping ensure that your payments are protected by an insurance company for the duration of the agreed-upon contract.
How do I sell my structured settlement?
If you want to sell your structured settlement, there are two primary ways to go about it: either use an assignment company or sell it directly to an investor.
Selling structured settlement payments directly to an investor will require some work on your end, but can potentially lead to better payouts for you. If you choose to go this route, there are several things you should know about how the process works. For starters, if you haven’t done so already, it’s important to determine whether these types of negotiations are allowed under your state’s laws.
How do assignment companies work?
Assignment companies act as middlemen between individuals who wish to sell their structured settlement and the investors who want to buy it. They serve as a buffer that helps protect both parties involved in the transaction by ensuring you receive timely payouts while helping ensure that your payments are protected by an insurance company for the duration of the agreed-upon contract.
The benefit to working with assignment companies is that you generally have access to a wider range of investors willing to purchase structured settlements, which means you’re more likely to find someone who can meet your needs. However, while this may be true in theory, in reality, it can be difficult to find an investor willing to purchase your settlement.
This is because the amounts and timeframes for structured settlements vary widely and do not necessarily correspond with investors’ preferred investments. Additionally, many investors will refuse to consider a settlement unless they know the funds are protected by state law and cannot be seized by creditors or plaintiffs in the event of a default. Some assignment companies attempt to address this problem by only working with insurance companies that make these guarantees, but this does not eliminate all risks.
How do I pick an assignment company?
When deciding whether to use an assignment company, it is important to find one that can provide you with the best service for your particular needs.
To begin, ask yourself what type of investor you are looking for. If you want to sell your structured settlement as soon as possible, you will likely need access to a large network of investors who are willing and able to purchase your settlement quickly. This is especially important if you anticipate needing cash shortly, as some investors may take up to six months or more to complete a transaction.
If you are looking for longer-term alternatives, you might consider an assignment company with access to high net worth individuals who can provide investment opportunities over several years.
Also, take a close look at the company’s website and other marketing materials to determine whether they appear reputable. If you have any questions or concerns about how your settlement will be protected under the assignment contract, contact their customer service department for clarification before signing an agreement.