Reselling Structured SettlementsIn these difficult economic times, people are looking for just about any financial relief they can get. When you look at various options, be sure to research carefully and thoroughly. Read the fine print. Make sure what you are doing is:

  1. Legal
  2. Ethical
  3. Clear

The past few years I've been hearing and seeing advertisements from companies who want to purchase “structured settlements” for cash. This is sometimes an attractive offer for those experiencing financial hardship.

A structured settlement occurs when a personal injury case is resolved by the defendant agreeing to pay the claimant a set amount for a set period of time. For example, if someone sues a driver for injury resulting from a traffic accident, the injured party might accept $100 per month for ten years of structured settlement payments.

Sometimes people who receive these payments would prefer to get a lump sum cash payment, than to have their settlement sent a bit at a time. Enter: structured settlement buyout companies.

Why would someone buy a structured settlement from a claimant? Because they get it at a discount. In other words, the payment amount of the lump sum payment given to the claimant is less than the total payouts β€” with consideration for interest, etc. It's an accounting present value vs. future value calculation.

There's nothing wrong with a structured settlement that is made legally. And there's nothing wrong with buying a settlement from someone else. It's a completely arms length transaction to offer someone an amount they agree to in exchange for payments over a long period of time.

When entering into such a transaction, however, do your due diligence. Β It's up to you to know what you're getting into, what you're agreeing to, what your obligations and benefits are. A read a letter written from a claimant complaining about Stone Street Capital, for example. From his letter it would seem the root of his problem came from having no idea what he was doing. His grammar is horrendous (many of the mistakes aren't even noted in the quoted material). But I tend to be more than a little suspicious of someone who has received enough personal structured settlements to consider himself an expert on reselling them. Does he make his living chasing his own ambulances?

In any event, as with any contract, take responsibility. If you choose to sell a structured settlement, make sure you do your own research to get what you think is fair.