The need for a major home update can come up without warning. Your roof might be leaking after a bad storm. An elderly parent might need to move in, but there’s no room. Maybe a pipe burst and flooded your bathroom. If something like this has happened to you suddenly, you may be thinking about taking money from your future structured settlement payments as a lump sum to take care of it. But is it possible?
If you have a structured settlement, it is possible that you could get cash for your future payments to pay for a home renovation. It first depends on whether the court agrees that it’s a good move for you. Then, it’s up to you to decide whether it’s the right thing to do financially, and if so, how much of your future payments you will need to sell.
Figuring out whether you can sell your structured settlement
A good place to start is to review the terms of your original structured settlement agreement, which will likely say whether you can sell your structured settlement. A financial expert can help you figure it out and then weigh whether it’s the best option.
For the transfer of a structured settlement to be allowed under federal law, the sale must:
- Be in the best interest of the seller.
- Taking into consideration the well-being of the seller’s dependents if applicable.
- Not violate another court order or any other law.
Each state also has its own rules regarding the sale of a structured settlement. These laws expand on federal law and may include additional requirements. We have gathered links to the applicable state structure settlement laws to make them easy for you to find. The court in the appropriate jurisdiction must approve the sale in advance.
As a general rule, people can legally sell their future structured settlement payments if they are facing an emergency or otherwise need an immediate lump sum of cash. A home renovation may fall into an immediate need. The best thing to do is to talk with an expert who won’t push you to make a move if it isn’t the right one.
How much money will I get?
Well, you won’t get the full dollar value of your future payments. But with historically low-interest rates, you should be able to get a discount rate up to 5% for 10-year payments. Compare that to other options:
- You could get a payday loan, which may cost you 400% in annual interest.
- You could find an unsecured personal loan. If your credit is fantastic (700+), you might be able to get 6% interest. But for most of us, loan rates are between 6% and 35%.
Selling your future payments will cost you money, but generally much less than other options.
You can also sell some of your structured settlement payments
Maybe your structured settlement is your only asset that can cover the costs of your renovation in full. That asset may even be a lot more than what you need at this particular moment. It’s important to know that you have the option to sell only some of your future payments. It’s something that you should consider carefully and discuss with a knowledgeable financial advisor. Selling too little could result in the need to sell multiple times, which increases costs through the process and decreases the lump sum you end up with. On the other hand, selling too much can result in losing the tax advantages of having part of your settlement deferred.
If you’re considering selling your future structured settlement payments, we can help. Visit crowfly.com or call (888) 560-6629 to get started. We believe our customers value a trustworthy, straightforward, and transparent partner with their best interests in mind. Our experts will help you make the best decision for your unique situation -- with no pressure ever.