Receiving a structured settlement after a lawsuit or insurance claim can provide steady income over time, helping you cover expenses and maintain financial stability. However, life sometimes throws curveballs—urgent expenses, business opportunities, or unexpected emergencies—that prompt many settlement recipients to consider selling part of their future payments for a lump sum of cash.
Selling part of your structured settlement can be a practical solution, but if done incorrectly, you risk losing a significant portion of your money. This article explains how to safely sell part of your structured settlement without sacrificing too much value, ensuring you retain financial security while meeting your immediate needs.
What Is a Partial Structured Settlement Sale?
A partial structured settlement sale means you sell only some of your future scheduled payments—not the entire settlement—in exchange for a lump sum today. This option is ideal if you only need a certain amount of money now but want to keep the rest of your steady income intact.
Unlike a full sale, where all your future payments are sold, a partial sale allows you to:
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Maintain long-term financial stability
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Access cash without losing your entire settlement
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Manage your finances with more flexibility
Why People Sell Part of Their Structured Settlement
People consider partial sales for several reasons, including:
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Medical expenses not covered by insurance
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Debt consolidation or paying off high-interest loans
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Starting or investing in a business opportunity
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Covering education costs or special family needs
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Emergency situations like home repairs or vehicle replacement
The Risks of Selling Your Structured Settlement — Even Part of It
While selling part of your settlement can be helpful, it comes with risks. The biggest is the loss of value due to discount rates applied by companies that purchase these payments.
How Discount Rates Work
Settlement buyers calculate how much your future payments are worth today by applying a discount rate—an interest rate that reflects risk and profit margins. The higher the discount rate, the less money you get upfront.
For example:
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You have $100,000 coming over 5 years.
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A buyer offers a lump sum of $70,000.
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The effective discount rate might be 15-20%, meaning you lose 30% or more of your settlement’s value.
How to Minimize Value Loss When Selling Part of Your Structured Settlement
Here’s how to safely sell part of your structured settlement and keep the most value possible:
1. Shop Around and Compare Offers
Don’t accept the first offer you receive. Different companies may offer vastly different lump sums for the same payment stream.
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Get multiple quotes from reputable structured settlement buyers.
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Compare the discount rates and total lump sums offered.
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Read reviews and check the Better Business Bureau (BBB) ratings of the companies.
🔑 Tip: Look for buyers with transparent pricing and no hidden fees.
2. Understand the Discount Rate and Fees
Make sure you fully understand the discount rate applied to your payments. A lower discount rate means you keep more value.
Also, ask about:
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Origination fees
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Legal fees
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Court costs
These fees may be deducted from your lump sum, reducing your net payout.
🔑 Tip: If fees aren’t clear upfront, ask for a detailed breakdown in writing before signing anything.
3. Work With a Qualified Attorney
Selling a structured settlement requires court approval to protect your interests. An experienced attorney can help you:
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Review the sale contract
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Negotiate better terms
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Ensure the sale is in your best financial interest
Many states require legal counsel or a guardian for minors or disabled recipients.
🔑 Tip: Never sign any agreement without legal advice from someone experienced in structured settlements.
4. Sell Only What You Need — Not More
Selling just part of your settlement means you can meet immediate financial needs without sacrificing your entire income stream.
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Calculate how much cash you really need.
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Leave enough payments untouched to cover future expenses.
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Keep in mind the time value of money—you might get less now, but future payments could be worth more in total.
🔑 Tip: Avoid the temptation to “cash out everything” for instant gratification.
5. Check for Any Tax Implications
Most structured settlements from personal injury cases are tax-free, but selling part of your payments might have tax consequences depending on your situation.
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Consult a tax professional before the sale.
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Understand if any lump sum proceeds are taxable.
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Keep good records for tax filing.
🔑 Tip: Tax treatment can vary by state and settlement type—don’t assume it’s tax-free without expert advice.
6. Beware of Scams and High-Pressure Tactics
Unfortunately, structured settlement buyers often use aggressive marketing and high-pressure sales tactics to rush you into selling.
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Don’t respond immediately to cold calls or unsolicited offers.
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Take your time to evaluate your options.
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Verify buyer credentials and licenses.
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Avoid buyers promising unrealistic returns or “instant approvals.”
🔑 Tip: If something feels off, walk away and seek advice from trusted financial or legal professionals.
How Does the Court Approve a Partial Structured Settlement Sale?
Since structured settlements are designed to protect recipients, any sale of payments must be approved by a court. This process ensures:
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The sale is in your best interest
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You understand the terms and consequences
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You are not jeopardizing your financial security
The court typically reviews:
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The amount you’re selling
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The lump sum offered
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Your financial situation and needs
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Legal advice you’ve received
This process can take several weeks but adds a layer of protection.
Real-Life Example: Partial Sale Success Story
Jane’s Story:
Jane had a structured settlement paying her $3,000 per month for 20 years after a car accident. When her house needed urgent repairs, she considered selling part of her payments.
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Jane consulted a lawyer and got multiple offers.
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She decided to sell only 3 years’ worth of payments.
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After negotiations, she received a lump sum equal to 75% of the total face value of those payments.
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She retained the remaining payments for future income.
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The court approved the sale after confirming it was in her best interest.
Jane used the lump sum to fix her home without jeopardizing her long-term financial security.
Alternatives to Selling Your Structured Settlement
If you’re hesitant to sell payments, consider these alternatives:
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Emergency loans: Sometimes less costly than selling settlement payments.
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Borrowing against other assets: Home equity or personal loans.
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Budget adjustments: Reduce expenses or increase income sources.
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Financial counseling: Help manage your money more efficiently.
Final Thoughts: Selling Part of Your Structured Settlement Can Be Safe If Done Right
Selling part of your structured settlement can provide much-needed cash when done carefully and with full knowledge of the risks. To keep as much value as possible:
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Compare multiple offers
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Understand discount rates and fees
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Get legal and tax advice
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Sell only what you need
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Beware of scams and high-pressure tactics
By taking these steps, you can access your money safely without sacrificing your financial future.