Why People Decide To Cash In
Settlements are generally designed to account for all of your potential future income demands, including ongoing medical bills and other obligations that may present themselves. They will take into account your income from other sources to determine a reasonable payment amount over the years. Of course, the payments might not always cover what is needed, which brings some people to cash in their settlement payments sooner to get the extra income they need.
A few of the most common reasons why people choose to get their structured settlement money are listed below:
- Avoid Taking on More Debt – Most people who need cash from their structured settlement are seeking a solution to get more money without creating new debt. Taking on a new loan is a big commitment that not everyone can make. With all of the available lending options, it might seem like there is a better way than cashing out future payments, but for some people this is truly the best option. This is money that you already have coming to you, after all. You just need it sooner than the payments will provide it, so you can opt for a cash out.
- No Interest on New Loans or Credit Lines – Another reason people choose to sell their settlement rather than taking on new loans when they need money is the interest payments. There are fees and potential penalties associated with getting money for settlement annuity payments, but they are much lower in comparison to the interest rate and fees associated with taking on a new loan. These are also one-time charges, while a new loan or line of credit is going to have ongoing interest charges that could add up over the years.
- Little to No Savings – Most people have very little money saved, if any, for emergency expenses and other big bills that may come along. More than half of the people in the U.S. claim that they could not come up with $2,000 in 30 days if there were an emergency, let alone needing money immediately. In some cases, the only option people have is to sell their payments.
- Emergency Expenses or Unexpected Bills – Emergencies happen all the time. Car repairs and unexpected medical bills are two of the common reasons people consider cashing their payments. This can be easy access to quick cash, which is critical in an emergency situation. Keep in mind, though, that the process of getting structured settlement cash does take some time so you will have to make arrangements with your creditors or find a way to get through until the cash in is approved.
- Reduction in Income – Losing your job is difficult because you still have the same expenses to pay every month, and it can take time to find a new job. Cashing out a settlement is a good way to pay bills that need your attention while you are searching for a new job.
What’s the Discount Rate
The amount that you get for your settlement depends on a variety of factors, including how much the settlement amount, the amount of cash you need, and the fees and charges to cover the process of selling a settlement annuity. Plus, it depends on what the factoring company is actually willing to pay for the settlement.
The discount rate runs between 6% and 29%, and is essentially comparable to paying interest on a traditional loan. This is essentially the fee that you pay for cashing out your structured payments, and is important to be aware of when you are considering this option.
DRB Capital can work with you to explore your options for getting your settlement money fast.
A company that buys your full settlement will assume all future settlement payments and give you a (reduced) lump sum in return.
A partial sale will give them a specified number of payments or years, at which point the settlement payments will return to you. For example, if you need $20,000 and your settlement pays out at $10,000 a year, the settlement company will assume payments for two years.
Cashing out a structured settlement isn’t difficult. The first step is to find a reputable company like DRB Capital that will give you the best terms and service. A court hearing must be scheduled, as a judge makes the final decision on whether a settlement cash out is valid and accepted. Here are the steps, simplified:
- Decide the amount you want to cash out
- Call DRB Capital to get a free quote
- Complete all necessary paperwork
- Attend scheduled court date for approval of settlement cash in
- Get your money
Is it Worth it?
The main attraction of structured settlement payments is that they provide tax-free access to cash for life. As such, there are some disadvantages that you must consider in comparison to the benefits of taking cash for your settlement. For starters, there are fees for that can go as high as 10%.
You do get fast access to large sums of money, which will allow you to cover a financial crisis that you are facing. You can also use the funds to invest in a business or buying a house. The downside is that you will be losing a stream of income and forfeiting all future payments, but it may very well be worth it when you are in a financial bind.
Get The Cash You Deserve For Your Structured Settlement