Evaluating Your Need: A Guide to Responsible Selling of Structured Settlement Payments
Our team specializes in helping people get the most from their structured settlements. As a result, we’ve talked with people who want to sell some or all of their payments for just about every reason under the sun. We’ve counseled people who wanted to sell payments to fund a dream, to get out from under debt, to cover an unexpected emergency — you name it.
In some of these cases, we do end up helping people sell all or a portion of their payments to liquidate cash for their immediate needs. In other instances, though, we caution against selling payments. Why? Because parting with the stability of this income stream is often not in the person’s best interest.
When we’re helping people decide if selling structured settlement payments is responsible and right for them, we evaluate their unique situation. Here’s a closer look at some of the determining factors we take into consideration with our customers.
Short vs. Long-Term Financial Needs
It can feel agonizing to know you’ll have the money eventually when you feel like you need it now. But money can be particularly tricky in that way. It’s easy to feel like you never have enough. The majority of Americans — regardless of income or economic status — feel stressed about their money.
The problem with selling structured settlements often hinges on timing. Yes, it’s absolutely a way to get cash in hand now. But if you’ve come to rely on those payments as part of your income stream, liquidating them now can spell financial trouble later. In fact, this is a big part of the reason why so many court cases end with a settlement rather than a lump sum payment.
All told, managing money is hard — and having more of it doesn’t necessarily make it easier. A lot of our customers are better served by learning better financial management skills rather than cashing out payments to patch over issues.
Ultimately, we encourage everyone to zoom out and look at their long-term financial needs as well as their short-term ones. If you’re experiencing a true emergency (e.g., unexpected medical bills) or a unique opportunity (e.g., a fleeting chance to get a business off the ground), selling payments might make sense. But if you just want to use tomorrow’s money to solve today’s cash flow issues, you could be hurting yourself down the road.
Need vs. Want
Having your money tied on a strict distribution schedule can feel restricting. It’s your money, after all, and you might feel like you should be able to access it when and how you want.
This isn’t a good reason to sell your payments, though.
We often meet with people who feel they need to sell, but when we sit down and evaluate their situation, it becomes clear they merely want to. That’s not to say the desire is invalid. But there’s a big difference between truly needing to break up your payment schedule and merely wanting to have that cash in hand now.
Before you decide to sell, get clear on your motivation for doing so. Make sure it makes sense with your overall life goals. And make sure selling now won’t compromise your financial comfort in the future.
Ultimately, you only want to sell payments when it’s responsible to do so. To talk with an expert about your specific situation and get support in charting the best course forward, contact our team at Strategic Capital today.