Factoring company (another name for structured settlement companies) purchases often are made at high discounts. Factoring companies are known for enticing injury victims to sell their annuity stream of payments for fast cash at a less than fair value. A structured settlement company or factoring company will give you a lump sum for a low, discounted price. The company makes sure that any amount that is owned to them is paid in advance. Of course, the amount of money that you receive in such an arrangement will be 10 to 15% less than the total amount you would have received over the normal schedule of your payments.

It is important to consider the best interests of any dependents that may be relying on the income and affected by the overall outcome of a settlement. However, there seems to be an emerging trend by some structured settlement companies to apply a high level of pressure to their clients until they accept an offer that may not be fair or in their best interest. This is called low balling on the initial quote, and can be countered by price match any higher quotes you receive. This has become so commonplace, as a matter of fact, that some states have passed laws that require anyone selling their structured court settlement to be represented by a private financial counselor through the entire transaction.

Trading in your structured settlement for a lump sum eliminates the tax-free guarantee for the annuity payment stream that you and your loved ones may receive on a regular basis. Once the company that you’re dealing with and going through buys your payment stream, those payments are not longer considered free from taxes due to Section 104. It’s usually much safer to find a reliable structured settlement company to provide regular payments through an annuity or some other type of financial instrument that will simplify your tax burden.

That being said, selling your annuity stream is a decision that has to be made at the macro level, taking all the benefits and problems into account. Yes, losing tax-free status is a big drawback, but there are other factors that may weigh in more heavily.

Instead of a single lump sum payment, structured settlements pay awards in periodic payments for a set amount of time. If you are ready to unload those problematic periodic payments for a lump sum, you are probably trying to figure out how to go about selling your annuity income stream. When you reassign the rights to your payments, the issuing company will begin sending payments to the individual or organization that you reassign ownership of your structured settlement to. Structured settlement payments may be reassigned for a short period of time or continue for the remainder of the awardee’s life.

The company that facilitates the transfer of your structured settlement would generally be the recipients of your future payouts and you would be given a lump sum of cash in return. The settlement payments that are sent to them are no longer yours, because when you sell your structured settlement payments you are transferring the ownership of your future payments to a third-party buyer. Remember though, that long term payments from an annuity decrease in value over time as inflation increases.

The upside to cashing out with a structured settlement company is that you would end up with a lump sum to use for whatever you need. There are many companies who offer lump sum cash payouts in exchange for a stream of annuity payments. With the advent of new Federal Laws in 2002, an injured party has the legal right to get cash for their structured settlement payments by selling their annuity to a third party if he or she wishes to do so. Finding a buyer can be somewhat complicated, especially if you’re not sure where to begin.

Structured settlements provide the injured victim with the immediate security of an assured payout rather than small payments over time. Structured settlement companies who purchase a structured settlement do so to make a profit. Structured settlements provide very important financial protection to injured victims. Protection against early dissipation by annuity owners who lack the experience to invest the large sum of money. Structured settlement transactions are priced on the basis that a dollar today will not have the same buying power as it will tomorrow.