Should I sell structured settlements? The experts weigh in – What financial author Dave Ramsey says about your structured settlement sale.
Financial advisor Suze Orman cautions that you should not sell structured settlements unless you are truly prepared to change your financial habits. This is a theme that you will see if you talk to other financial advisors and lawyers who are not affiliated with structured settlement factoring companies. Few people outright argue against selling payments. Instead, they advise caution, like attorney Eugene Ahtirski, from California, who reminds his clients that there are fees and time constraints associated with selling structured settlements and thus such a sale should not be taken lightly. This advice applies to all of you, not just structured settlements in California.
What does Dave Ramsey Say?
Now, let’s look at another famous and respected financial advisor, Dave Ramsey. Dave is author of a number of financial books, providing hundreds of pages of financial advice and answering questions for average people.
The answer from Dave is clear.
He writes on his website,
“There would be nothing wrong with getting a buyout of a structured settlement so long as the discount’s not so deep that you wished you hadn’t done it.”
David recommends that the seller be careful to weigh their needs against the costs. He also reminds the reader that the further out the payments are that they are selling the less money they will see from the sale. This comes back to the time value of money that we discussed, that money in the hand now is worth more than money owed to you in the future.
So if you wonder, “Can I sell my structured settlement?” The answer is yes you can, and in some cases even Dave Ramsey thinks it could be a good idea in some cases.
Remember that there is no “one size fits all” financial recipe!
Dave raises some good points about the benefits of structured settlements and that there is nothing wrong with selling your settlement if the price is right. But consider your personal needs along with his general financial advice before you make a decision.
Advice to Avoid Payday Loans at all Costs
One financial writer for the online journal The Examiner suggests that debt settlement may be a better option for those seeking to pay off high interest credit card debt than selling structured settlement payments to pay off credit cards. But she also cautions strongly against payday loans, and suggests, as we have, that those considering selling settlement payments get multiple quotes and consider their other options, before making a decision based on their individual situation. She makes some good points, but remember that debt settlement damages your credit and often only saves you 20-40% of your balances, so selling your settlement might make just as much sense.
Seniors Should Be Careful
Prime Time News, a news website dedicated to helping seniors thrive, provides similar advice. They suggest that you consider the costs of sale before selling any type of periodic payments.
They also remind the reader to consider the ethics, reputation and customer care of the company they are considering selling payments to.
Consult a Financial Advisor but Use Caution
Before you make any big decision, including getting cash for structured settlement payments, you would do well to ask the advice of a financial advisor in your area. Patrick Hindert, Managing Director of S2KM Limited and a lawyer highly experienced in the settlement industry, said that a major problem with structured settlement sales is when people considering the sale of their payments “compare multiple offers without assistance from advisors who are knowledgeable about transfers and can help negotiate favorable terms including but not limited to price.” However, use caution – ensure that you ask an advisor who has no interest in your decision.
Find an advisor that is paid a set fee, one who does not recommend a factoring company to you and earn a fee for that referral.
In states where independent professional advice is required the company buying your payments may pay your fee, so ask about it. Only with independent advice will you get an honest opinion. But also, be sure that the advisor knows about your situation and structured settlement sales so that they can give you an honest, credible recommendation.
The General Consensus
So, there you have it. Suze Orman recommends that you look at your entire financial picture and how you can change your own habits before you sell structured settlements. Dave Ramsey says that there is nothing wrong with getting cash for structured settlement payments as long as you understand what you are getting into. Other advisors caution you to consider your own situation and look at the bottom line, then make the best decision for you. Strategic Capital agrees. The ball is in your court, but call us today if you have questions or want some additional information.