Daytime television is full of ads offering viewers cash in exchange for structured settlement payments from lawsuits, lottery payments, annuities, or other sources. Though this sounds like an ideal way to get a lump sum of cash quickly, it might not be the best choice for your situation. Read on to learn more about getting cash for settlement payments.
Consider the Tax Implications
While getting your cash right away can help you put a down payment on a house or pay off high interest debts, it may not be worth it if you will have to pay high interested in the structured settlement when you sell. Charges for selling the settlement can be as high as 10 percent, and the funds may also be subject to federal taxes and penalties.
Do You Have Other Options?
Most financial advisors will recommend against cashing in a structured settlement. However, you should find a professional who is familiar with your situation and finance, and be completely candid with him or her. In some cases, especially for individuals who are not financially solvent, the benefits of cashing out the settlement may outweigh the negative consequences.
A Lengthy Process
While daytime TV promises quick cash from your structured settlement, that’s usually not the case. All situations of this kind must go before a judge, and you must be able to prove that you have a legitimate need for the funds immediately. The judge makes sure that this transaction is in your best interest as well as that of the holder of the settlement. If the judge approves your transaction, it will typically take a few months before you have your hands on the funds.
Fortunately, selling off your full settlement is not the only option. In some cases, payees are able to sell off just a portion of the structured settlement, receiving the cash they need while potentially minimizing the financial penalties. A lawyer who specializes in this type of transaction can examine your situation and explain all the possibilities to help come to the best solution.
With research and planning, you can make sure that you are able to make the most of your structured settlement, whether in cash or in regular payments.