People considering the decision to sell settlements have a number of costs and benefits to think about, such as the convenience of getting all the money at once weighed against a much higher tax liability. When people receive settlements, they are often available in the form of a series of payments over time. This may not always be convenient, and people can turn to third parties to buy out the settlement, providing a lump sum all at once in exchange for the settlement payments over time.
The immediate benefit is access to ready cash. People who have a cash flow problem may sell settlements to access a supply of money right away, instead of having to wait for a series of payments. One consequence is that the third party takes a cut, and people will not receive the full amount of the settlement if they choose to sell. They also incur a large tax liability, because the settlement is income, and tax authorities want their share. It is advisable to plan ahead for tax issues to avoid an unpleasant surprise.
People who sell settlements can also encounter legal issues. In some regions, sale of settlements is not permitted by law and this option is simply not available. Others have restrictions and it is important to become familiar with the limitations before entering negotiations to sell settlements. People looking into the possibility of working with a settlement sales company should also compare and contrast offers as some companies may offer better deals, or could be willing to negotiate if a potential customer has a better offer from somewhere else.
When a settlement is made available, people may be offered a choice between a lump sum and a series of payments. The amount of money overall with periodic payments is usually higher, making this option more appealing. It may be possible to accept a series of payments and then turn around and sell the settlement to receive a lump sum larger than the one originally offered. Before accepting a settlement, people may want to look into their options so they can make the best financial decision.
If people feel forced to sell settlements by financial circumstances like an immediate need for cash, they may want to look into alternatives like personal loans with the settlement as security. Being in a hurry in a high pressure situation can result in getting a bad deal and once a sale takes place, it is final. The first step should be a consultation with a personal finance adviser to get information about options and advice on the best decision for a given situation.
