Many people who have a lot of debt and a fixed annuity or structured settlement payments have considered selling their investment or payments to a company that specializes in purchasing these investments. These companies, such as the recently popular JG Wentworth, provide their clients with a lump sum of money that they can use towards paying off their debt. For many people, however, this is not a good solution to their financial problems.
What Is A Structured Settlement?
A structured settlement is any type of legal contract that requires an individual or company to make monthly payments to another individual or company. Typically, a structured settlement is awarded after a court case in lieu of a lump sum of money. This is usually done so that the defendant can afford to make the payments, lowering the risk that they will declare bankruptcy and leave the injured party with nothing.
How Much Money Will I Get For Selling My Structured Settlement?
Selling a structured settlement will typically get the seller a lot less money than they would have otherwise received if they had opted to continue to receive payments from the settlement. While the exact amount will vary from company to company, consumers report getting between thirty and fifty percent of the total amount they would have otherwise received.
Because some structured settlements are designed to make payments until the end of the recipient’s life, it is hard to determine how much that person would have received had they opted to continue to get payments. In cases where a structured settlement is set up like this, most companies will pay between three and five years’ worth of payments in a lump sum. In cases where a person believes that they will not live this long, it may make sense for them to sell their structured settlement.
Should I Sell My Structured Settlement To JG Wentworth?
JG Wentworth has become famous for their funny ads during daytime television encouraging people to sell their structured settlement or annuity. While the ads are certainly attention-grabbing, this company is one of many offering this service. Consumer reports have stated that while the customer service at the company is good, their amount they offer for structured settlements and annuities is in line or on the low side of what other companies offer.
Does it make sense for me to sell and use the money for debt repayment?
While the amount you can expect to receive from selling your settlement or annuity can vary, odds are you will only receive a small fraction of its overall value. Most consumers can assume that they will get less than half of their value of their settlement or annuity. This is like taking a fifty percent cut of an investment. When you consider that the highest interest rate that can be charged by a credit card company is 29.99%, you will most likely be paying more by selling your settlement than you would otherwise pay in interest on your debt.
The exception to this is loans with high interest rates such as pay day loans. Since some of these loans can charge upwards of 500% interest per year, it is possible to see how selling for a lump sum of cash can save you money.
Fortunately, there are better ways to get rid of high interest debt than to sell your annuity or structured settlement. One option is debt settlement. Through this process, a professional will negotiate with your creditors to reduce the interest and principal on your debt.
For many people, debt settlement is a much better option than selling a structured settlement or annuity. By going through debt settlement, a person is able to get rid of their debts in a matter of months, and they will still be able to continue to collect their payments from their settlement or annuity.