How Much Debt Do You Have? Why Lump Sum Settlements Could Help You Get Back on Your Feet

Paying off your debt

When clients agree to receive a structured settlement — often as the result of a lawsuit or lottery win — they may not realize that there are ways to reduce debt and to settle old medical bills that may be better served by receiving a lump sum of cash. The average American family pays almost $1,000 every year in interest on credit cards, and the discouraging aspect of credit card debt is that it can seem impossible to repay.
Most households in America are faced with at least $15,000 in credit card debt, and overall debt of more than $100,000. In the last decade, the average American income has risen by about 25%, but the average cost of living has gone up by almost 30%. An unplanned family event or medical crisis can mean the difference between saving for a vacation and having to delay it for months or even more than a year.
The choice to receive a lump sum settlement instead of a structured settlement annuity may be a great choice for some people because having cash on hand could enable them to make larger purchases without having to pay interest, which can be considerable. Overall, Americans carry more than $11 trillion in unpaid bills. With home ownership prices averaging more than $250,000, finding the money for a 20% down payment while waiting for structured settlement annuities to mature each year may be tricky.
Likewise, college students can save money on school loans if they are able to pay for each semester in full. With tuition averaging between $10,000 and $40,000 per year, people who are able to pay for college — perhaps with the cash from a structured settlement annuity — without having to take out student loans should find themselves in a better position when they start to work. Avoiding student loan debt could mean that young, working adults are able to relocate to a new city, put a deposit on an apartment, and purchase all the supplies and clothing they need for a new job without having to resort to credit cards.
Often, a structured settlement annuity can be converted into a lump sum, allowing recipients the flexibility to handle bills that may have built up during the course of pursuing an outcome in court. In the event of an extended period of time away from work, selling fixed annuities may help people pursue education in a new field or to address medical bills that could be negatively impacting their credit reports. Pursuing alternatives to structured settlement annuities could help to eliminate bills, but it could also help lawsuit winners to invest in a new future for themselves and their families.