We live in a world where unfortunately accidents happen, and people do bad things. Thankfully most countries today have a court system that allows lawsuits to be brought to a judge or jury, and in many cases, some sort of a financial award to the person wronged and a punishment/fine to the wrong-doer. In many instances, the financial penalty is setup as as settlement, which means that the penalty won’t all be paid at once, and instead paid in smaller installments over time. While that might work for some, it may not work for others and they may prefer a large lump sum. To do so, you would seek a structured settlement, which means you negotiate a lower bulk payment now vs a bunch of small payments for a long period of time. Interestingly enough, only one-third of plaintiffs who get offered a structured settlement take it. So if you’re one of these plaintiffs receiving an financial award, your steady payments are a great way to ensure that your settlement reward lasts over time. 

However, life is unpredictable, and sometimes, you need your money right now. When this happens, you can sell your claim to your payments to structured settlement companies. These are companies that will pay you a portion of the value of your settlement upfront so they can take over the collection of your long term payments. 

Check out these tips to help you think through the sale of your structured settlement from a settlement company.

Customer Service 

Look for reviews from unbiased customers who have worked with the company. Read reviews on a third party site or ask friends and family for their recommendations. 

By doing this, you can get a heads up for any problems that might arise (and they very well might). You can also get a good idea of what it is like to work with a particular company. 

Denial Rate 

Although not likely, a settlement company might actually not want to give you a lump sum for your settlement. So, look for a structured settlement company that has a low denial rate. These are going to be the most reputable, professional, and fair to you, which you’ll want.

These denials come from the judge. Your proposed sale will need to get approved by a judge. Denial often occurs when the judge feels that the settlement is not in the best interest of the consumer; that’s you, so that’s a good thing! 

Total Dollars Purchased 

The number of settlements that a company purchases can be a good indication of their health and stability. As a general rule, the more money they purchase, the longer they have been in business, and the more likely your transaction will be completed as a success. 

Fees 

You will find that most companies will deduct fees from your payment. As with purchasing anything, you will need to shop around to determine which company offers the best arrangement for you. 

Fees typically include court costs, brokerage fees, and administrative fees. 

Bankruptcy 

Be wary of a company that has a history of bankruptcy. Many states offer a free searchable index that lets you research a company’s legal history. You can also request these documents from the court where the company is registered. 

A company that has a history of bankruptcy is not financially sound and can put you at risk. 

Broker vs. Direct Funded 

Another thing to consider when selling your structured settlement is whether you work through a broker or choose a direct funded sale. A broker is a middleman that connects buyers and sellers.

Most of the time, the buyer will pay the broker fee. Be careful though, sometimes this fee will fall on you. 

The other option is a direct funded sale. Here you work directly with the buyer. They will buy all or a portion of your settlement. Often, you can secure lower fees this way. 

Start Comparing Structured Settlement Companies

Now that you know what to look for, you can start comparing structured settlement companies. This will ensure that you sell your structured settlement to the right company. 

You want to get a fair price from a reputable business. Compare the additional terms to ensure you agree with the fees. 

Be sure to check out our financial guides to answer all of your money questions. 

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