Your focus is to find the right company to sell your annuity for the best possible price. Why? So you can put the most cash in your pocket. While that is your focus, there is a lot that you’ll need to do before you can get there. If you rush things, you could make a wrong decision which could cost you thousands of dollars.
Let’s start with the reason you need the money:
Most companies won’t tell you this, but you are going to have to appear before a judge for approval to sell.
Why a judge?
This is a legal agreement, and it takes a judge to cancel that legal agreement. Don’t stress though, as this isn’t as bad as it sounds. You’ll just need to tell the judge in your paperwork, “I’m selling my annuity for…” and explain your reasons. The judge has your best interests at heart and wants to make sure you are making the right decision for not only you but for your family and those that rely on you for financial reasons.
Here are the most common reasons that selling your annuity or structured settlement is accepted by a judge:
Here is excellent news: You don’t have to sell your entire annuity or structured settlement.
You can sell annuity payment or a portion of it, so you still get monthly payments, and you also get the money that you need right now to get you out of your stressful situation.
That’s what you want, right?
Of course, you do.
It is wise to write down all that you owe, what your monthly expenses are, and also write down what your monthly annuity payment is. For example, if you are getting $1500 a month from your annuity, but you are paying $1700 a month for medical bills and credit cards, you are losing $200 a month.
However, if you sold a portion of your annuity, it could pay off the credit card and medical debt, and even though you would now be getting $750 a month, you would no longer have the debt, so you actually are AHEAD $750 a month instead of down $200.
Can you see how that would reduce your stress level? That is nearly $1,000 net difference a month!
Of course, every situation is different, and it is essential that you speak with an expert so they can assess your situation and make the best recommendation for you. There’s also a chance that the medical companies will reduce the amount you owe if you pay it in one lump sum. It never hurts to ask.
Don’t be afraid of fees during this process. The expert who is helping you must be paid, not just their time, but their expertise. Their knowledge will help you get the most money from your annuity or structured settlement so you can sleep better at night.
There might be taxes or penalties in certain states. This is a question that you need to ask BEFORE you sell.
How do you pick the best company to work with? Here are some questions you should consider so you make the right decision.
- Does the company clearly outline and explain all my options to me in a way I can easily understand? What are the company’s fees?
- Do they openly discuss their fees or do I have to ask probing questions to get the complete answer?
- Will I be responsible for legal, bank, or other fees, or are these fees taken care of by the company through their standard fee?
- How long will the company’s process take from start to finish?
- Does the company provide a free quote?
- Is there an option to receive an advance on my settlement so I can pay bills now instead of waiting until the process is complete?
Never be afraid to end a phone call if you feel uncomfortable with the process. There are plenty of companies available, and one is undoubtedly the right fit for you and your situation.
Laura Bushnell is Editor in Chief for National Review Brand Foundation of Consumer Updates and based in Boston. Previously, she held senior VP level positions in corporate finance and consumer financial planning firms.