Can you sell future payments from a structured settlement annuity for a lump sum?

If you have suddenly found that you need a large sum of cash relatively quickly, you might be considering selling your future structured settlement payments. Here’s a good place to start. Below, we offer some basic information about who may be able to sell, the laws that govern the sale, and what to do next. 

First, it’s important to know that people can only legally sell future structured settlement payments from certain types of cases. These include settlements from the following:

  • Personal injury lawsuits
  • Workers compensation claims
  • Lawsuits related to sexual harassment, discrimination, and other civil issues

The original agreement may dictate whether the owner of the structured settlement is able to sell. If a person qualifies, selling a structure then requires court approval. 

Federal and state laws for those selling a structured settlement

In general, federal and state law will allow the holder of a structured settlement to sell the asset if they really need the money. The federal government calls the process “structured settlement factoring transactions” and notes that the sale of a structured settlement must be authorized in advance in a court order in the correct jurisdiction. To qualify for sale under federal law, the court must confirm that:

  • The sale would not violate another court order or any other law, and 
  • The move is in the best interest of the seller and his or her dependents.

Each state also has its own rules regarding the transfer of ownership. For example, New York and other states require the transfer institution to first advise the seller, in writing, to seek independent professional advice regarding the transfer, and the seller must either speak with a professional or waive that advice in writing. California outlines exactly what must be included in the transfer agreement, prohibits any blank spaces to be completed after the seller signs, and even provides a font size minimum for the document. 

Why do some people decide to sell structured settlements for cash?

Selling isn’t the answer for everyone, but there are reasons people choose to sell their structured settlement. Sometimes, a person needs a large lump sum of money to do something like make a major home repair or avoid foreclosure. Others may be trying to open a business, pay for college, or get out of debt. If the court allows and it’s the right move, selling future structured settlement payments can be helpful in obtaining a large amount of cash relatively quickly.

If this sounds like your situation, it’s important to take your time and be as informed as possible before selling your future structured settlement payments. Seeking the help of a financial expert can determine whether the holder is legally able to sell in the first place and weigh the advantages and disadvantages of selling.

If you’re legally able to sell, here’s what you should know

Each year, it is estimated that people with settlements sell $1.8 billion worth of future payments for only $600 million. Big-name players in the industry buy people’s settlements for a steep discount and then take a huge fee when they sell them. 

CrowFly is a unique solution that’s meant for the 21st century. We offer reasonable transaction fees by connecting sellers with vetted eligible purchasers without needing to pay for unnecessary business expenditures. For more information on how CrowFly’s process differs from our competitors, visit crowfly.com.