How Structured Settlements Work

If you need to bounce back from a personal injury in a way that makes sense for you, it will come down to how you handle the negotiations. Negotiations are a critical part of getting what you need out of this process and will allow you to move forward and walk away from your injuries with the money that you need. However, having access to this money will also prove a potential investment for you, since you can get help from a company that can sell it for you. By selling one of these settlements, you will have access to money that can be used for many different reasons.

First and foremost, let’s define what a structured settlement is so that you can understand. It is an out of court agreement on a specific amount of money that lets you pay for your damages, as you also drop your lawsuit. It is this out of court settlement that gives you the compensation that you need. The beauty of these agreements is that you will be able to turn this settlement into a stream of income when you decide to sell it. The subsequent section will explain a bit more about how you can go about selling your settlement.

The Process of Selling A Structured Settlement

When you believe a settlement sale is in order, you’ll need to understand a bit more about what is required of you to sell it. First, you must find the help of a company that is willing to purchase your agreement. In many situations, there are lifetime payouts for these settlements, particularly if you sustained significant injuries. You will be able to sit down with a company to come up with an amount that they will pay to purchase your plan, and this can be paid out in some different ways.

The first and most common ways that this sale goes through is with a lump sum payment. When this happens, you will be able to enjoy still the tax benefits that come along with your settlement and will either receive one payout or multiple payouts of large amounts of your entire policy. You will need to go over the terms of your policy to see which will carry over when you decide to sell your settlement.

Another way that the sale goes through is with an agreement that will give you some different payouts over the subsequent years. This can be advantageous to you if you’re looking for in ongoing stream of income as opposed to a lump sum payment. This can often be a matter of preference for you, so you will need to go into the process understanding exactly what you hope to get out of it.

There are a lot of different reasons that you might opt to sell your structured settlement. Because of this, you should take inventory of your options and the issue at hand to decide how you will use the money. Some of the ways that selling your settlement can be helpful is to purchase a new property, get seed money for an investment and to pay off any debts that you might have. When you would like to go about the process of selling the settlement, you will need to be sure that you can match up with the right company that can help you out. There are a few top companies that you will want to do business with in this regard.

The Top Structured Settlement Companies

We have a lot of people e-mailing us the same question: how can I sell my structured settlement and which company to choose. Thankfully, you have three solid options to turn to when it comes to attempting to sell your settlement. These three options are JG Wentworth, Peachtree Financial and Seneca One. They are all regulated by the NSSTA. By going through these options meticulously, you will have the opportunity to get the best plan possible for you and to negotiate with them on a payout that will make the most sense for you.

  • JG Wentworth has been around for years and is considered a premier company when it comes to structured settlements.
  • Peachtree Financial is a Florida company that has a 20-year reputation of doing the same.
  • Seneca One boasts excellent rates and speedy payouts whenever you would like to sell your structured settlement plan.

How To Choose The Right Structured Settlement Funding Company

However, when it comes down to it, the decision on which company you decide to go with will be completely and totally up to you. You will need to study these companies to the best of your ability and give yourself the opportunity to speak with representatives that can explain the entire process to you. You should also shop around between these three and any other that make sense to you to be sure that you can get the fairest payout possible for your settlement agreement. Do not sign the contract until you understand the ins and outs of selling your payout and will be able to make the wisest decision for you. With these companies, you will typically be speaking to the same representative on a regular basis, to build continuity. They will keep you abreast of the timetable of your out-of-court settlement and let you be the judge on which one you decide to do business with. From here, you will be able to get cash in your bank account which will allow you to use it for any financial matter that you see fit.

Selling your structured settlement can be an excellent endeavor as long as you know exactly what you’re doing and that you find a company that is the most reputable. From here, you will see a deposit in your bank account based upon the agreement that you set up with the company. Take this information and use it so that you can make the right decision for you and to get the money that you need.…

You Should Keep Your Mortgage Because You Get an Income Tax Deduction Lie

I die a little inside every time I hear someone repeat this myth.  Man oh man.

Anyhow, to show you exactly why the income tax deduction isn’t a good reason to keep your mortgage, you’re going to have to stick with me as I go through some calculations here.

Say you buy a $300,000 home.  You make a 20% downpayment.  You end up with a mortgage of $240,000 that you plan on paying off over 30 years.  Your interest rate over the next five years is 3.5%.

Your monthly payments are going to be around $1075/month ($12,900 total in 12 months).  The amount of that that goes towards interest payments is about $690/mo — a whopping $8280 total in 12 months.

Now let’s pretend that you either saved up or lucked out and came into a windfall of cash that you could use to pay off your mortgage in full.

Are you better off paying it off to save on all that interest you’re paying to the bank? Or should you keep the mortgage to get the income tax deduction from the interest you’re paying?

Well, let’s run the numbers and see.

Let’s carry on with our game of pretending, and pretend that you pay 25% of your earnings to the IRS for income tax.

If you paid off your mortgage, you’d no longer have to pay $8,280 of your earnings to the bank in the form of interest charges.  Instead, you’d be paying the IRS income tax on that $8,280, and if you’re in the 25% tax bracket, you will pay the IRS $2,070.

So what’s better? Giving the bank the full $8,280? Or paying the IRS only $2,070?

Obviously, you’re way better off if you pay off your mortgage, and save all that money that you’d otherwise have been paying to the bank, right?

Hell, even if you’re in the highest tax bracket, paying about 40% of your income in taxes, you’re still way better off paying off your mortgage.  Because paying the IRS 40% of $8,280 ($3,312 in taxes) is still a lot better than paying 100% of $8280 to the bank.

So I rest my case.  Do not ever, ever, ever make the mistake of thinking that you’re saving money by not paying off your mortgage.

Want to do some calculations that are specific to where you live? No problem.  Here’re a handy tax benefits mortgage calculator that estimates exactly how much you’ll save on taxes each year by carrying a mortgage, and allows you to compare that figure to how much you’ll be paying each year in interest payments.

LIE! You should keep your mortgage because interest rates are lower than other types of loans and you can invest the money in the stock market or a mutual fund

Proponents of this idea say it’s the way to go because the amount of interest you’re paying on the mortgage is offset by the profits you’ll make from investing the money in a good mutual fund or similar investment.

Before you jump all over this, do some quick math and see if it’s worth the risk to you.  Because the odds are high that it isn’t worth the risk at all.

Let’s say you saved up $10,000 cash and are debating whether or not to use it to pay down your mortgage where you’re paying 3.5% interest or invest it in a mutual fund where you’re told to expect a 7.5% return.

If you use it to pay down your mortgage, you’ll save $350 (i.e. 3.5% of $10,000).

If the mutual fund prediction is correct, you’ll make $750 in profit.  So that’s $400 more than what you would have saved if you’d put it down on your mortgage.

But we didn’t take into account income taxes yet.  Let’s say this $750 profit is taxed at a 20% capital gains rate.  If that’s the case, you’ll pay the IRS $150, and have $600 left over to enjoy.

So now you’re only $250 ahead of where you’d be if you’d put that $10,000 cash towards paying down your mortgage (i.e. $600 profit from investment – $350 savings on mortgage interest = $250).

Maybe that sounds like a good trade to you.  But there’s one more thing you need to consider.


If you put that $10,000 towards your mortgage (3.5% interest), it’s a 100% guarantee that you save $350.

But if instead, you put that $10,000 into that mutual fund, it’s not a guarantee that you’ll end up having $600 in after-tax profit to enjoy.

The market could tank.

The prediction of the return you’ll get could be wrong.  Maybe the mutual fund only ends up making you $300 in after-tax profit.  If that happened, you would have been $50 further ahead if you’d put the ten grand towards paying down your mortgage.

Who knows!  Anything could happen.

So unless you’re a long-term, time-tested, exceptional stock or investment fund picker, I recommend that you put that $10,000 cash towards your mortgage.

LIE! There’s nothing wrong with buying furniture, vacations, or electronics with a loan

Here’s the thing.  Every single one of these things will go down, down, down in value starting the very second you take them home, and you risk owing more than it’s worth from day one.  (Okay, so you can’t take your vacation home, but you get the idea.  Once you take that trip, you can’t sell it to recoup any of your money.)

If you’re ever tempted to add to your debt by using credit to buy furniture, a vacation, a new TV, or some other big-ticket electronic item, stop yourself immediately and remind yourself of the cold, hard facts.

  1. Financing these things with debt almost always means you’ll pay more for it.  The next time you’re tempted to finance something like this with debt, calculate how much extra it’ll cost you once you take into account all the interest and fees you’ll pay.
  1. You don’t need any of these things.  You won’t die, get sick, or have any other horror fall upon you if you don’t buy it.

Disliking your current furniture is no excuse.  The fact that the upholstery is wearing out isn’t either (because you can patch it yourself or cover it with a blanket/cover until you’ve saved up the cash to replace it).

No one needs a new TV, home entertainment system, stereo, home automation system, smart phone or even a computer — humans survived for eons without these things.

Maybe you’re shocked that I include a computer on that list since I make my living with one.  But I can assure you that’s only because I could save up cash to buy one in the first place.  Until then, I made do without one.  And you can too.

If you need to type up a resume, or a letter, for example, you can simply head over to your local library and do it there.  Or ask a friend or family member if you can borrow their computer.  Even if you consider the cost of giving them money for the paper and ink used to print your letter or resume, the cost is still far less than that of buying your computer.

If you need to do some online research, most local libraries will allow you to do this for free.

Now on to the topic of vacations.  “But I need it to relieve my stress!” some might say.  The truth is, there are plenty of ways to relieve stress for free.  Local libraries have loads of books on the topic of stress relief — you can learn about using meditation, exercise, and all kinds of other things to relieve stress.  And they cost absolutely nothing.  Don’t get me wrong; I’m certainly not opposed to vacations.  But you have to be able to afford them to take them.  If you can’t afford it and take out a loan to pay for it, you’ll only add MORE stress to your life due to the payments you’ll be making long after the fun has ended.

  1. If you need to finance it with debt, you can’t afford it.  Period.  There are no and, ifs or buts that will ever make financing this kind of thing with debt a wise decision.
  1. Even no-money-down, no-interest loans are risky. You see, usually, these kinds of so-called “deals” come with a catch.  Maybe it’s a no-payments-for-one-year deal — but part of the deal is that if for any reason you aren’t able to pay it off before the one year is up, you’ll be slapped with extremely high-interest rates until you do.