A sale of a structured settlement involves the assignment of future payment rights from the person receiving the payments (known as the payee, annuitant or structured settlement recipient), and a third party. The process of selling a settlement of this nature is governed by not only Federal law but also governed by the state where the annuitant resides. While state laws differ slightly, many of the individual laws have common elements. These elements include a disclosure period, a court filing, a notice provision and the assignment for a lump can only be consummated by the entry of a court order.
The court that hears a transaction that proposes to convert a future structured settlement or portion thereof to a lump sum must assess whether said transaction is in the best interest of not only the payee but the payee’s dependents. As you might expect, this can be a very factually intensive discussion with each judge exercising his or her judicial discretion to determine whether permitting the transaction is in the structured settlement recipient’s best interest. From California to Maine the courts throughout our country are presented with petitions relating to the assignment of structured settlements on a daily basis.
By the nature of it being a court proceeding as well as the fact that state law, in general, requires 20 days’ notice of the hearing to any interested parties, the process can take some time. It is fair to assume that between the day that a petition related to the assignment of a structured settlement is filed and the day the case comes before a judicial officer, it could be as little as a month and as much as 2 to 3 months (in some areas). In other words, if you need “cash now” and your goal is to satisfy this need by the conversion of a structured settlement annuity to a lump sum, you should expect the lump sum of cash not to come over night and appear in your bank account.
Many people looking to get a lump sum of cash for a structured settlement fail to recognize the process takes such a long time. Whether you are looking to buy a house, stop foreclosure, purchase a vehicle or pay off debt, you need to recognize the timeframe involved and not wait to the very last minute thinking the money will hit your account tomorrow. With that said, it is also critical that you not move forward in a haste fashion and not consider better options for raising the capital you need.
Not rushing to sell a structured settlement also means that if you have determined that doing so is, in fact, in your best interest, that you consider talking to more than one structured settlement buyer and evaluating not only what they can offer you as a lump sum but also what is the best way, based on your specific needs to format a structured settlement buyout. Keep in mind even if you decide to raise money through the assignment of your structured settlement it very well might not mean that you should or have to sell all of it, or even the immediate payments that you are currently relying on for you day to day. It is also important for you to budget for NOT receiving the structured settlement because once you sell it and get your lump sum, you will not get the payments back—rarely on structured settlement transactions for lump sum designed a repayable loan with the structured settlement utilized as collateral.
One of the aspects that folks often inquire about is the availability of a “cash advance” as part of a structured settlement sale. The reason this feature is often of critical import to individuals is that their current situation can be aided by receiving some amount of money today even if they will not receive the full lump sum if and until a court enters an order approving the assignment as in his or her best interest. Cash advances may be available from the structured settlement buyer you elect to work with but it is important you inquire about this when you are asking about the services that structured settlement buyer offers.
How much of an advance on your lump sum buyout can you receive? What is the process to get that? The answer depends on a host of factors including but limited to the state where you live. It cannot be stressed enough that while a cash advance may be an important aspect of the transaction to you, it is critical that you evaluate the transaction itself- whether liquidating part or all of your structured settlement- is in your best interest. While you are in the best position in most cases to assess what will improve your life it is never a bad idea to pause and contemplate all options before you make any decisions