Did you know that the average American has $90,460 in debt that includes all types of consumer debt products? Having debt is a slippery slope as it is hard to recover from because of high interest rates and consistent income levels.
If you happen to have a structured settlement and receive payments over time, selling it could help you get out of debt. There are many instances where receiving cash for a structured settlement makes sense.
Read on to learn the pros and cons.
Pros of Selling a Structured Settlement
The main reason people choose to get cash for a structured settlement is to pay off some type of debt or emergency. A lump sum of cash from a structured settlement can be used for the following:
- Mortgage payments
- Medical bills
- Credit card debt
- Student loans
These are the most common reasons people choose to sell their structured settlement, but you can use the cash you receive for anything.
Selling structured settlements can provide you with a lump sum of cash instead of waiting years to receive money. Companies will buy out your payments for a discounted price.
Receiving a lump sum of money is a huge pro for many, especially those who want to pay off debts that have high-interest rates. Using the cash, you receive from a sold structured settlement can help you avoid paying more interest over time.
Although less common, another pro of selling is that you can use your lump sum to invest. Inflation affects the value of a structured settlement, so investing a lump sum could lead to better financial stability down the road.
Cons of Selling a Structured Settlement
When you sell a structured settlement, you receive many pros. If you use the money wisely, a lump sum can lead to short and long-term benefits.
However, as with anything, there are downsides to selling.
The first con is that you won’t get the full amount of your structured settlement when you sell it. The selling process works because companies buy your future payments at a discount to make a profit.
If you don’t have a great financial track record, selling your structured settlement could cause more problems. If you make unwise purchases or investments, your financial future won’t be easy.
Those that rely on their structured settlement payments to pay bills and living expenses should consider their real needs before selling.
The last con is that you’ll need to find a reputable business to buy structured settlements from you. Although you won’t get the full price of your settlement, you should still receive a fair price.
Take the time to compare different buying companies to avoid getting ripped off when you need money the most.
Cash for a Structured Settlement: Is It Worth It?
The worthiness of receiving cash for a structured settlement depends on the individual. If you have an urgent need for quick cash, this could be the right option for you.
It’s your responsibility to weigh the pros and cons of this decision. Whatever you choose, make sure it benefits your future financial stability.
Once you have a decision, come back to our blog for more personal finance advice.