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Many times during lawsuit negotiations the parties involved agree to an out-of-court monetary settlement figure. When these settlement numbers are very large the payout can be done over a long time period from months to years. This is called a structured settlement. Settlements are usually made prior to court hearings where the plaintiff may be awarded an even larger or a lesser amount. A settlement may also be noncollectable.

There may be an occasion later to sell structured settlement agreements prior to their fulfillment. There are companies who will buy up a structured settlement at a discounted price. This means that the plaintiff will receive a portion of the entire amount right away rather than over time.

There are many reasons when it is a good idea to sell structured settlement agreements. They are considered like property and can be bought and sold for whatever price the holder of the settlement wants to take. If a person wants to buy a home and needs a large down payment they may want to sell their future payments for less than they would receive over time in order to accumulate that large amount of cash.

Companies that purchase structured settlements operate in a manner that is similar to a payday loan or cash advance lender. They charge a good fee to provide cash in advance because they are then taking on the risk that in the future the payments expected may not actually materialize. Fees will vary by the lender and it is a great idea to search around for the best deal before selling out a settlement agreement.

Some settlement agreements will need to go before a court before they can be sold. This is to assure that the person holding the settlement is not being taken advantage of because the main reason for the structured settlement was to provide a guaranteed income to that person in the future. If they were injured in an accident and received a big settlement for the rest of their life there would be consequences to selling out their agreement.

When attempting to sell structured settlement agreement it is wise to remember that it is possible to sell either the entire amount or a partial amount. By selling just a partial amount the holder of the agreement would continue to receive lesser payments over time in the future and not lose all their guaranteed income.

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

George Mandala is a Financial Consultant