If you've received a structured settlement—perhaps from a personal injury lawsuit or an insurance payout—you may have been offered the option to sell it for a lump sum. At first glance, it sounds tempting: get a big pile of cash now instead of waiting years for smaller payments. But before you sign anything, there are critical truths most companies won’t tell you.
In this article, we’ll uncover 5 hidden realities about selling structured settlements that you absolutely must know before making a decision.
🔍 What Is a Structured Settlement?
A structured settlement is a financial agreement where you receive periodic payments over time rather than a one-time payout. These arrangements are typically tax-free and are used in cases like personal injury, wrongful death, or workers' compensation lawsuits.
For example, if you were awarded $500,000 in a court case, you might receive $25,000 per year for 20 years rather than all at once.
🧨 Should You Sell It? 5 Things They Don't Tell You
1. 💰 You Will Lose a Big Chunk of Your Money
One of the most critical facts most companies gloss over is how much value you lose when you sell. Structured settlement buyers offer you less than the total value of your payments. This is because they discount future payments to present-day value—plus they build in profit margins, fees, and interest for themselves.
📌 Example:
Suppose your total settlement is worth $200,000 over 10 years. A buying company might offer you only $100,000 to $120,000 in cash today.
That’s 40–50% of your total value lost.
✅ Tip: Always ask for a discount rate calculation. If it’s above 10%, it’s likely a bad deal.
2. ⚖️ The Court Must Approve the Sale—and It Might Not Happen
Selling your structured settlement isn't as easy as signing a contract. By law, in most U.S. states, a judge must approve the sale. The court evaluates:
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Whether the sale is in your best interest
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If you truly understand the financial implications
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Whether you have any other sources of income
Judges often reject deals that seem predatory or unfair—especially if you're being offered far below market value or you're in a financially vulnerable position.
🧠 Reality Check: You may spend weeks preparing only to have the court say "no."
3. 🦈 You’ll Be Targeted by Pushy, Predatory Companies
Structured settlement buyers often operate in a gray area. They target recipients—often accident victims, disabled individuals, or those with limited income—who are desperate for fast cash.
You might receive aggressive phone calls, flashy online ads promising “instant approval,” or even mailers with fake checks inside. These companies often:
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Use confusing contracts
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Charge hidden fees
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Downplay long-term consequences
🚫 Don’t be pressured. If a deal feels too good to be true, it probably is.
4. 🏦 You Have Other Financial Options
Most companies won’t tell you that selling isn’t your only option. If you're struggling financially, you may consider:
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Personal Loans: You can sometimes borrow against future payments at a lower cost.
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Hardship Advances: Some insurance companies allow small advances on settlements.
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Financial Counseling: Nonprofits or advisors can help restructure your finances without sacrificing your settlement.
In some cases, you can also sell just a portion of your structured settlement—keeping future payments while still accessing a lump sum today. This is safer than selling the entire package.
💡 Pro Tip: Ask if you can sell just 2 or 3 years of payments rather than the entire settlement.
5. 🧓 You Might Be Jeopardizing Your Future Financial Security
What feels like a lifeline now could become a regret years later. Most people sell structured settlements because of temporary hardships, not long-term planning.
The truth is:
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Once you sell, you can’t get it back
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You may struggle in retirement, especially if medical needs increase
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You might spend the lump sum quickly and be left with nothing to fall back on
Structured settlements are designed to protect people from financial mismanagement. Selling one may provide short-term relief but long-term instability.
📉 Studies show that many people who sell their settlements end up worse off financially within a few years.
💬 Final Verdict: Is Selling Ever a Good Idea?
Yes—but only in very specific situations. Selling your structured settlement may make sense if:
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You’re facing a medical emergency
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You need a down payment for a life-changing opportunity (home, education)
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You’re confident in your financial management skills
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You’ve consulted with a financial advisor or attorney
However, it’s almost never wise to sell it just to:
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Pay off credit card debt
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Go on vacation
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Start a business without a solid plan
🛡️ Tips Before You Sell
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Get Multiple Quotes: Don’t accept the first offer.
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Consult a Lawyer: Especially one who understands structured settlements.
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Use a Financial Advisor: Ensure your long-term needs are still met.
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Ask About Partial Sales: Keep part of your future income.
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Read Reviews of Buyers: Stick with reputable companies.
📌 Conclusion
Selling a structured settlement might feel like a fast way to solve your financial problems—but it comes at a steep cost. What most companies don’t tell you is how much money you lose, the court’s involvement, and the long-term impact on your security.
If you’re considering selling, take your time, do your research, and speak to a qualified professional. The money might seem like a blessing today, but your future self will thank you for making the right call.