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Those persons who have been the recipient of any type of structured settlement from a lawsuit are able to sell their future payments in order to receive a lump sum from a buyer of structured settlement agreements. There are companies who work much like a cash advance lender to help those persons wanting to switch their annuity over to a lump sum of cash. Good reasons to sell out a structured settlement agreement include getting cash for a home down payment or education.

Structured settlements are an agreement between two disputing parties prior to court that in effect settles the dispute without going into a court setting. Defendants like to settle out of court because they may be able to pay less. If a jury gets to make an award in the lawsuit they may hit the defendant with a very high penalty award to the plaintiff. The plaintiff may just want money now and to end the process out of court for many reasons, including that perhaps they are not sure they will win the case.

For whatever reasons the settlement is made it is approved by the court and the defendant then makes payment of the agreed amount over a long period of time. Often this can be a lifetime in a case where a person is so injured they are unable to work. The structured settlement provides a method of getting a guaranteed income over that time period.

Sometimes the recipient of the agreement wants to find a buyer of structured settlement agreements that will exchange the possession of the agreement for a cash lump sum. The agreement is treated like a piece of personal property and it can be bought and sold. A company that purchases structured settlements takes on some risk and for that they will charge a hefty percentage of the amounts due. The holder of the agreement can sell all or part of their future income payments to a buyer of structured settlement agreements. There are some cases where any sale must be approved by the court. This is to protect the plaintiff from being taken advantage of by a buyer. Risks to the buyer include inflation that will make future payments worth less than today’s value and that the payer will stop payments. Even when a settlement is agreed upon there is the chance that the defendant will be unable to pay.

This Financial Services article was written by George Kantwala on 11/4/2009

George is a Financial Consultant