How Your Structured Settlement Can Equal Cash

Are you the recipient of a structured settlement? Perhaps you received a structured settlement due to injury or even lottery winnings. A structured settlement means that the total amount of money you were awarded is being paid to you in payments over an extended time period. This is fine for some people, but what if you would rather have a large lump sum of money all at once? It's possible -- thanks to what are called factoring companies, also known as structured settlement companies.

A factoring company will purchase your structured settlement payments. This means they will pay you an amount that is less than the total of your settlement and take over receiving the payments. This is very much like the procedure of factoring which is done in the corporate world. Let's say a company performs a service that is worth $10,000 but is still waiting for their payment after a long period of time. The payment is coming, but the company just can't afford to wait any longer for their money. A factoring company might come in and offer to buy the payment for $8,000 in cash. Yes, this means a loss of $2,000 but for a company who is desperate for cash factoring can be a lifesaver.

Getting cash for your structured settlement works in the same way. You will be selling your structured settlement payments to the factoring company in exchange for a reduced amount of cash. Let's say your settlement totals $300,000 and is spread out over 10 years of payments equaling $30,000 each. The factoring company might pay you $250,000 (this is a hypothetical figure only) for your settlement. You get a large lump sum and they make $50,000 over the course of ten years. If done correctly with good intentions, this can be a win-win situation for everyone.

Once you get your lump sum payment, you can do whatever you want with it. Some people use their money to pay medical or legal expenses, college tuition, or living costs. Others choose to invest their lump sum payment. If you're a skilled investor, this can be a way to multiply your money. No matter what you choose to do with your money, it's important to do plenty of research first to make sure selling your structured settlement is the best thing to do.

Copyright 2007 Jim Sterling - All Rights Reserved

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