You may have heard about it on the radio or see their ads on TV: Finance companies want to buy a structured settlement (or annuity or other streams of scheduled payments that are legally bound in place). In other words, these companies will offer the holders of a structured settlement a single lump sum of money for all or part of their payment streams. Why would they do that? What’s in it for them? In short, they get the same benefits you would if you keep a structured settlement yourself:
Tax treatment: depending on how the payment stream is structured by the court, they can be limited or even no tax liability related with scheduled payments.
Reliable income: companies are just like you-they need money they can rely on in order to keep the doors open. A court ordered the revenue stream is one of the most reliable stream of capital around.
Healthy Return on Investment: when a company offers to buy your structured settlement, they will not be offering face value of debt, they will pay less than you would have receive if you had held the settlement that will pay you $100,000 over the next 10 years, perhaps this finance company will offer you something like $80,000 to make the purchase. The gap between the face value and what they pay is be their profit.
So you can see that these financial companies have many reasons to purchase your structured payment stream. But it was already mentioned, most of these benefits apply to you- so be sure you are willing to not forget about these benefits in order to get the piece of money now. This all assumes that selling your payment stream to a third party even is even an option. Many countries have laws that restrict the sale of structured settlements. Do your due diligence before you even approach one of these providers. But if it seems you can sell your payment stream, and you really need a large amount of money now, it’s nice to know that you have a choice.