If you resolve a lawsuit or insurance claim, you may opt for a structured settlement where you receive your money in regular payments. This method can have its financial perks, often yielding a larger total return than receiving your money in one lump sum. However, accepting your money in regular payments, while seemingly the safe and logical path, comes with valid reasons for selling off your structured settlement to access your funds all at once.
1. Eliminate Debt
Suppose you’re dealing with excessive high-interest debt. In that case, selling a structured settlement can give you immediate cash to eliminate these outstanding balances. Freeing yourself from such debt allows you to breathe easy, while also possibly enhancing your credit score. You can utilize the funds from a structured settlement to repay credit card debt, vehicle loans, personal loans, student loans, arrears in taxes, and other forms of debt.
2. Handle Financial Emergencies
Maybe your financial safety net isn’t robust enough to handle financial emergencies, such as a job loss or serious illness. A lump sum from selling your structured settlement can help cover bills if you become disabled or fall ill and can’t work any longer. It can also assist with potential hefty medical bills if your health insurance coverage is lacking. Offloading your structured settlement can be an effective way to deal with creditors.
3. Acquire a Home
Homebuying isn’t inexpensive, with many lenders now demanding at least 5% down payment plus closing costs. This financial necessity is burdensome to many prospective homeowners. Though it may take a year or more to save that sum, you don’t have to postpone your plans. As selling off a structured settlement can provide immediate cash, you can embark on your dream of home ownership that much sooner. A lump sum could also enable a larger down payment, subsequently reducing your mortgage loan amount.
4. Establish a Business
If you dream of entrepreneurship, selling a structured settlement might be the push you need. Regular payments may fall short of launching your business, but a lump sum might provide substantial capital for advertising, equipment acquisition, commercial space rental, and other business expenses.
5. A Change of Heart
After some reflection, you might rue the decision to receive your settlement in phases. That’s okay. Sell your structured settlement and take full charge of your money. You can invest the cash into a high-yield savings account, a certificate of deposit, or a money market account to grow your personal wealth.
While there are several convincing reasons to sell your structured settlement, ensure you understand the implications of this choice. Regular structured payments are usually tax-exempted, but this changes once you take a lump sum. Also, should you invest your lump sum, be prepared to pay taxes on the resultant interest.
