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Sell Structured Settlement Payments - Don't Sell Your Structured Settlement Payments

Lump sums cost too much in the long term.

money instead elizabeth lump

Since Elizabeth was rear-ended in her SUV, she has been receiving four hundred dollars a month. She didn’t know what a “structured settlement” was at the time, but now she looks forward to that extra check like her morning cup of coffee. Lately, she has learned that she can sell her structured settlement payments, gaining a large lump sum instead of these smaller, regular checks.

She imagines what the lump sum could do—a down payment on a house, a vacation, a vehicle that burned less oil. Even if she were not so extravagant, she could list a dozen little debts that such a burst of cash could settle with plenty leftover for savings.

There is nothing unusual about Elizabeth’s way of thinking. Large sums of money are titillating—why else would we pay money to watch them get batted around in game shows? Yet, large sums of money also have a habit of vanishing and leaving only new debts in their place.

Structured settlements—the money paid when a person is wronged in a non-criminal way, such as a car accident—are a tax-free additional income. This means that, unlike many incomes which claim to be X amount of dollars and are only Y dollars when they reach their destination, structured settlements bring as much money as they promise.

When consumers sell structured settlement payments, though, the institution buying the settlement payments slices off a chunk for themselves. The fee is not a small one, which is one reason that settlement purchasers like J.G. Wentworth, Peachtree, and others do not provide any information up front.

A structured settlement purchasing website will ask for basic information up front—size of payments, length of settlement, and contact information. High pressure sales staff then contact the settlement holder to try to convince them why they want as much money as possible right now instead of slowly and in larger amounts over time. They know that the quote is going to sound awful to the settlement holder, and their job is to butter them up to receive the news that they are going to be spending a sizeable amount of money in order to have their money immediately.

Overall, it is a terrible idea to sell structured settlement payments. If the settlement truly is burning a hole in its owner’s pocket, he or she would be better served by making a significant purchase with a payment plan. In this way, the settlement is used to build a better credit score and does not cause its owner to overreach financially. Better yet, the money can be invested, thus providing a way to genuinely raise standard of living instead of making a few purchases beyond the settlement holder’s means.

Elizabeth did not sell her structured settlement payment, and she was glad to have talked herself out of it. Not long after her flight of fancy, her husband was laid off, and the extra $400 allowed her to make steady payments until he found new employment. Her family didn’t even notice the change in income, and once they were back on their feet, she started dropping the money directly into her savings account.

Elizabeth resisted the lump sum temptation, and was better off in the long term. Rather than falling for a financially perilous scam, she quickly learned that selling structured settlement payments is, hands down, a bad financial move.

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