A structured settlement buyout is the sale of some or all of your future structured settlement payments to a factoring company in exchange for a lump sum of cash now. It is not a loan. The transaction requires court approval in most states, and the amount you receive is based on a discount rate applied to the future payments you give up.
What Is a Structured Settlement Buyout?
A buyout (also called a "cash out" or "transfer") is a transaction where you sell the right to receive some or all of your future structured settlement payments to a factoring company. In exchange, you receive a lump sum of cash today.
The key distinction: this is a sale of an asset, not a loan. You are not borrowing against your payments — you are permanently giving them up. Once the sale is approved, the factoring company receives your future payments directly from the annuity issuer.
Because you're giving up guaranteed, tax-free income, the law requires a court to review every buyout. The judge must find the sale is in your best interest before it can proceed.
Full Buyout vs. Partial Buyout
Full Buyout
You sell all remaining payments. You receive the largest lump sum, but you give up every future payment.
- Largest possible lump sum
- No future income from the settlement
- Harder to get court approval in some states
- Best when you have other income sources
Partial Buyout
You sell only a portion of your payments — for example, the next 5 years of monthly payments, or a single future lump sum.
- Smaller lump sum, but you keep ongoing income
- Courts generally look more favorably on partial sales
- Often faster to approve
- Good when you need cash for a specific need
How the Buyout Process Works
Get Quotes from Multiple Buyers
Contact 2–3 verified factoring companies. Each will quote a discount rate and a lump sum offer for the payments you want to sell.
Choose the Payments to Sell
Decide between a full or partial buyout, and which specific payments you'll transfer. Your attorney can help you evaluate the trade-off.
Independent Professional Advice
Most states require you to receive independent legal or financial advice about the sale before it can be approved. The advisor cannot be the buyer's attorney.
Court Approval
A judge reviews the proposed transfer, the discount rate, and whether the sale is in your best interest. If approved, the court issues a transfer order.
Funding
After the court order, the factoring company pays your lump sum, and the annuity issuer redirects the sold payments to the buyer.
What a Buyout Costs: Discount Rates Explained
The cost of a buyout is expressed as a discount rate — the percentage the buyer keeps as profit. The higher the discount rate, the less cash you receive for the same future payments. Industry range is roughly 9%–18% for established factoring companies.
| Future payments | Discount rate | Approx. lump sum | You give up |
|---|---|---|---|
| $1,000/mo for 10 years ($120,000) | 10% | ~$75,000 | ~$45,000 |
| $1,000/mo for 10 years ($120,000) | 15% | ~$62,000 | ~$58,000 |
| $2,000/mo for 20 years ($480,000) | 12% | ~$230,000 | ~$250,000 |
Numbers are illustrative — actual offers depend on payment timing, your state's protection act, the buyer, and court findings. Run your own numbers with our Structured Settlement Calculator.
When a Buyout Makes Sense (and When It Doesn't)
Reasons people sell
- Medical emergency or unexpected large expense
- Paying off high-interest debt
- Buying a home or starting a business
- Consolidating payments into a single lump sum
Reasons to think twice
- You rely on the payments for living expenses
- The discount rate is above 20%
- You have other options (home equity, family help)
- You're being pressured by a buyer to sign quickly
Verified Companies That Handle Buyouts
SettlementDirectory.net lists 61+ verified companies that buy, broker, or advise on structured settlement transactions. Each listing is checked for association membership (SSP/NSSTA), state licensing, and complaint history.
Verified Buyer 1
Factoring company, 25+ years active, NSSTA member
Verified Buyer 2
Broker network, multi-state, SSP member
Verified Buyer 3
Annuity-issuer affiliate, in-house processing
Verified Buyer 4
Broker, attorney-supervised process
How to Compare Buyout Offers
The difference between offers on the same payment stream can be tens of thousands of dollars. Get three quotes and compare them on the same terms.
- Use our Compare tool to put two or three companies side by side
- Compare discount rates, not just headline lump sums
- Ask whether the company is a direct buyer or a broker
- Check state coverage — some buyers operate in only 10–15 states
- Check association membership — SSP and NSSTA members sign codes of conduct
See our Verification Standards for how we evaluate each listing.
Frequently Asked Questions
What is a structured settlement buyout?
A structured settlement buyout is the sale of some or all of your future structured settlement payments to a factoring company in exchange for a lump sum of cash now. It requires court approval in most states.
How much of my settlement can I sell?
You can sell all of your remaining payments (a full buyout) or just a portion (a partial buyout). Courts often prefer partial buyouts because they leave you with ongoing income.
How long does a buyout take?
Typically 45–90 days from initial quote to court approval and funding, depending on the state and court calendar.
Is a buyout the same as a loan?
No. A buyout is a sale of payment rights, not a loan. You give up future payments in exchange for cash now, and the transaction is governed by state structured settlement protection acts rather than consumer loan law. See our Structured Settlement Loans guide for the full explanation.
Get Quotes from 3 Verified Companies
Compare verified buyers in our directory before you commit to a sale.