Who can receive a structured settlement?
If a plaintiff wins a lawsuit against a person, a group of people or any company, then he is compensated by a monetary settlement, which can be paid to him in regular and periodic installments over a large period of time. This regular and modulated mode of income is called a structured settlement.
A plaintiff receiving such structured settlements can also decide to sell off the modulated payments for a lump sum amount of money. It is of utmost importance to know the right time, both personally and according to the financial market, when to sell off your settlement for the maximum benefit.
Future security
Structured settlements provide security for life, as they are a stable source of income. In most cases, unless the plaintiff has impending loans or bills, the settlement payments alone are more than enough to sustain a regular and comfortable life. So if you are in a situation where there is no such guarantee of future income, then it is probably not the best time to sell off your settlement. For example if you have undergone an accident, which then eventually led you to win the lawsuit and get the structured settlement, but you are not sure about your working condition in the future, then in such cases it is advisable to hold on to your settlements until you find another source of regular income. The inflow of cash from the settlement can help you in sustaining your regular lifestyle.
After some time you might be able to get back to work and earn your own income. It is still not a good time to sell off your settlements, as they can be used a secondary source of income and can definitely increase your standard of living. However if you have impending medical or credit card bills to take care of, or huge student loans to pay off, then you can sell off your settlement and use the money to pay them off.
In fact in some cases where the payment of such bills or loans are not a matter of urgency, then you can use the regular installment amounts to settle the debts part by part, instead of settling it all in one go.
While in college – should I sell?
Being a college student who wins a lawsuit or any monetary compensation scheme has its own benefits. If you are in college and you do not have to worry about paying off of the student loans, then it is not the right time to sell off your settlement. You can use the regular income as a source of pocket money and not worry about asking your parents or guardians for extra cash. You can focus on your career instead of wasting your time looking for a part-time job. On the other hand if you have heavy education loans to pay off and you do not want to wait till you are graduated, then you can sell your settlement, or a part of it, to pay off your loans.
Inflation
Perhaps one of the biggest deciding factors in today’s financial market, inflation may actually affect your income. Although it directly would not affect the amount of the payments that you get over the years, as that is fixed, it might definitely decrease the value of money. You should study market trends and follow the ups and downs of the financial world daily, and sell off your settlements right before any tendencies of inflation. That way you will get maximum profit from your settlement. Even after considering the discount rate, it is possible that you might manage a good deal on your settlement. Because after all, the value of a yearly installment amount of $ 25,000 in today’s market, may not be the same as its value 10-20 years from now. So it is advisable to consult a market expert before taking such decisions.
It is seen that although a debatable topic, it is impossible to predict the correct time of selling off your settlement. It is a highly delicate situation which needs to be handled with proper care and expertise. It might be so that the right time in the financial world to sell structured settlements may not coincide with your personal needs. It might also be the other way round, that your personal need to sell off the settlement for a hefty lump sum amount is not cohesive with the ups and downs of the financial market. The correct move in such cases can never be predicted from before, without studying each individual scenario. In such situations, you are the best judge to decide when and how to sell off your settlement deal and to whom.
