Almost 20% of Americans between the ages of 18 and 24 would categorize themselves as being in “debt hardship.” The total debt of the average U.S. household is $129,579, with $15,355 of that debt coming from credit card debt. Over one quarter of all Americans fail to pay their bills on time.
Increasing debt and the cost of living is affecting countless people across the nation. Even though incomes have risen, with household income growing by 26% in the past 12 years, it’s not enough to match the 29% increase in the cost of living. When it comes to supporting yourself financially, all too often, the numbers just don’t line up. You could, of course, start working overtime or take on a second job. If you’re the holder of an annuity or the plaintiff in a lawsuit, there may be other options. To learn how you can leverage these resources to get much-needed cash now, keep reading.
How an annuity works
An annuity is a form of life insurance wherein the beneficiary of the annuity receives a specified sum of money over a certain period of time. The key to understanding an annuity is knowing the difference between lump sum and annuity.
With a lump sum distribution, the entire cash value of the annuity contract will be paid out to you in a single sum at the time of payout. Alternatively, you could elect to have your payouts occur over time in the form of an annuity.
Annuities vary in type and payment schedule. For instance, you may have a fixed deferred annuity which is set to begin paying you $1500 each month 10 years from now. This is a great thing to look forward to, but doesn’t offer much help with next month’s rent.
Selling your annuity
There were 34.8 million individual deferred annuity contracts at the end of 2013. These contracts totaled in value of over $2.58 trillion. If you have a fixed annuity that pays you a trickle sum over time, but you’d rather have a lump sum right now, you’re not out of luck. There is a secondary market for annuities which allows annuity holders to sell the right to their future income stream in exchange for a fixed sum today.
Selling a structured settlement
A structured settlement operates like an annuity. A structured settlement occurs when the plaintiff is to receive his settlement in future payments over time rather than a lump sum. Typically this arrangement is made to provide tax savings to the receiver and money savings to the payer. Over $6 million is paid to more than 37,000 Americans each year through structured settlements. The average payout from structured settlements is around $324,000.
As with fixed annuities, you can sell your structured settlement in exchange for a fixed price today. Again, you will be forgoing the future stream of income in exchange for a single, larger payment upfront. Of those claimants who chose to sell their structured settlements, the vast majority (92%) are glad they did.
How a pre settlement lawsuit loan works
The last potential money maker we’ll discuss today is the pre settlement lawsuit loan. After a plaintiff has brought a legal claim against a defendant, there follows a pre settlement period. This is the time between the claim being brought and the court determining their final verdict. During pre settlement, the plaintiff is essentially waiting for future settlement funds to arrive. Because pre settlement can last for many months, plaintiffs sometimes seek pre settlement lawsuit loan companies to provide cash upfront.
A pre settlement lawsuit loan can be seen as a cash advance against the future funds to be received upon settlement. A pre settlement lawsuit loan can help plaintiffs awaiting settlement meet current obligations such as cost of living expenses or medical bills.
Conclusion
If you’re like 20% of 18-24 year olds struggling with debt and happen to be in the possession of a fixed annuity, structured settlement annuity, or are in the pre settlement phase of a lawsuit, rescue from your obligations may be nearer than you think. There is a time when having a steady stream of future income can be a major benefit, but that time isn’t always today.