When the need to sell a structured settlement?

Probably you heard them on the radio or seen their ads on TV: Financial companies seeking to buy structured settlements (or annuity or other flow scheduled payments that are legally required in place). In other words, these companies will give the holder of a single structured calculate a lump sum of money for all or part of their payment flows. Why are they required to do this? What's in it for them? In short, they derive the same benefit would be if were to maintain a structured settlement yourself:

Tax treatment: Depending on how the payment stream is structured by the courts, they may be limited or even no income tax liability related to scheduled payments. Reliable income: companies in the same way as - they need money, they can count on to keep the doors open. The court ordered that the income stream has been one of the most robust capital flows around. A healthy return on investment when the company will offer to buy a structured settlement, they will not offer the face value of the debt; they will pay anything less than would have received if the settlement were kept, it has appointed a lifetime. For example, if you have a payment that will pay $ 100,000 over the next ten years, one of these finance companies could offer something like $ 80,000 to purchase. The gap between the nominal value and what they pay - is where they make their profit. Thus, you can see that these financial institutions have a lot of structured payment flows purchase reasons. But I mention, most of these benefits apply to, too - so you can be sure that they are willing to refrain from the benefits to get the chunk of money right now. One final note: this all assumes that the sale to a third party payment stream is even an option. In many countries (about 2/3 of them) have statutes in place that restrict the sale of structured settlements, and could be the federal restrictions affecting, too. Do due diligence before even come close to one of these providers. But if you think being able to sell the payment stream, and really need a large sum of money right now, good to know that you have options.