Structured Settlement Buyout – Looking At It From Both Sides

Structured Settlement Buyout


Structured Settlement Buyout

Structured Settlement Buyout – Consider The Offer Carefully

Although a structured settlement can be the best option for both plaintiff and defendant, there can be times when the plaintiff will need a larger amount of money for an immediate need.  It is at these times when a structured settlement buyout can be a preferable option.  There are court rulings which will help make this more equitable not just for the seller but for the buyer as well, so there is no need to worry about what it may cost to both parties if anything goes wrong.

During a buyout, what happens is that the payee or the one who is receiving the structured settlement will be selling his rights to the structured payment and will be transferring it to the one who will be buying the settlement.  In this setup, the original person who was receiving the payout from the structured settlement company will then relinquish his rights to the person who will be buying the payment from him by a one-time payment.  In this process, the buyer will give him a significant amount, but not the total cost of his full settlement in one single payment but he will lose all his rights to receive any further structured payment from the company.


To some, this can be a good situation as they will be able to receive a huge amount at the shortest possible period. This can help them to make large investments at the present such as buying a home or paying for a college education without having to wait for the partial payments to accumulate.  They will be receiving a large amount of money right now and will be able to spend it as they want.  If you need to pay for a huge medical fee or would have to pay a large amount for something, then this can definitely be a good option.  It is hard to come by a huge amount of money these days, except when you are gambling or doing something illegal.

To the buyer, this can also be an advantage since you get a source of periodic income.  Since the courts have ruled that money acquired in structured settlements is not subject to tax, the one who receives it will then enjoy the advantage of not having to pay taxes on it.  Aside from that, you also earn some profit since most structured settlement sellers are often willing to sell the settlement for a reduced amount.  Hence, you are getting an annuity for a lesser cost.  The difference between how much you paid for the settlement and the total accrued amount will be the amount of profit you earn.

Sellers of structured payments are often pushed into agreeing to sell it for a lower price, especially when there are a few buyers who are available and the need is pressing.  This can be quite a difficult situation as you are gambling your future earning into something which is much cheaper and which will also be subjected to a significant amount of tax.  But since there are not a lot of willing buyers who are willing to go through court procedures, the seller can be forced to sell them for a significantly reduced price.  So, the process of a structured settlement buyout is definitely a tricky one and you need all the information that you can get in order to handle it well.  You may also want to get the services of a lawyer or consultant who is honest and who specializes in the field to get you the best type of deal possible.

Before you consider any offer for a buyout of your structured settlement, you’d benefit by visiting our directory of structured settlement buyers, brokers and consultants to read reviews from consumers. No two companies are the same, and knowing which ones have a top reputation will help you make an informed decision.