Can I sell my structured settlement if I’m going through Bankruptcy or have already filed for bankruptcy?

Yes, You CAN sell your structured settlement payments, whether you are going through chapter 7 bankruptcy proceedings or afterwards, once your bankruptcy has been discharged.
In many states, Structured Settlement payments are considered an exempt asset which means that they are not subject to the claims of creditors. However it is imperative to let the bankruptcy trustee know about your structured settlement and to have the structured settlements listed on your Bankruptcy list of assets. If the structured settlement is not included in the asset list, by law the trustee has the right to seize undisclosed assets, including your structured settlement payments.
If you are currently going through bankruptcy proceedings and you want to sell your structured settlement payments, your bankruptcy trustee has to be aware of what you want to do and must sign off on the required documents. The bankruptcy trustee is the final decision maker and he or she could deny the entire structured settlement payment purchase. Therefore, it is important to make sure that your bankruptcy trustee is on board with the decision to see any of your structured settlement payments.
When it comes to selling structured settlement payments, the bankruptcy trustee will first have to obtain the bankruptcy Judge’s approval, and then the factoring company that buys your payments will be able to apply for a state court order. This is an important point – once the bankruptcy judge approves the sale of your structured settlement payments, a state court order is still needed, in order to satisfy the structured settlement transfer laws.

If you are in a state that requires Independent Professional Advice (IPA), the fact that the bankruptcy trustee and the bankruptcy lawyer obtained the bankruptcy judge’s approval satisfies the IPA requirement, so that a separate IPA is not necessary.

Let’s say that you have been discharged from bankruptcy then you can sell your structured settlement for cash – the decision is up to you, and it is a standard sale. You sign the documents, you make the decisions and you get the money. The structured settlement factoring company who is buying your payments will still do a search of your past records. The company will see that you have been discharged from bankruptcy and it will want to make sure that you have listed the structured settlement payments as an asset. If you had listed them, then there will be no problem or hold up. If you did not list them, then it is a problem, and both you and the company buying your payments will have to put some extra work into getting you your cash. What you have to do will depend on your situation. We have faced this situation number of times, and the vast majority of times we have solved the problem and funded our client.
Your structured settlement payments may be an untapped resource that you can use to get out of bankruptcy proceedings faster and get on with your life. It is very important to deal with a company that has the experts who know how to transfer structured settlement payments and can deal with any problems that come up!
Please call us if you have any questions about any part of the process – 1-866-256-0088.

Published : September 23, 2010

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