When and Why to Sell Structured Settlement Payments

 

For most people, this sounds like a pretty abstract concept. Lots of people aren’t even totally sure what a structured settlement is. If this is you, don’t worry. Why would you need to know this? For those who are interested, a structured settlement is an arrangement that settles a lawsuit, made out of the courtroom. Let’s say you’re the plaintiff. You’ve been hurt or wronged in some way. You sue the person or entity which has hurt or wronged you, and the matter gets scheduled to go to court.

 

Your opponent, the defendant, knows that your case is very strong. Their lawyers also know this. They know that they won’t have a chance in hell in a courtroom, in front of a real live judge and jury. So they pivot. Instead of getting the matter drawn out for months or years in a courtroom, kicking up high costs and damaging reputations, they opt to make a deal with you outside of the courtroom.

So you and your lawyers and they and their lawyers meet someplace, and they present you with an offer. Instead of dragging the matter out in a court of law, will you accept $X? If you say yes, the matter is resolved. Well, sort of. Sometimes, things are just getting started on your end of things.

In many cases, the defendant’s lawyers will push for you to receive a structured settlement, not a payment made as one lump sum. Structured settlements were instituted to ensure that plaintiffs get the most “bang for their buck”, so to speak, when they get a resolution to their case. With a structured settlement, a lump sum paid out monthly for many years, the plaintiff won’t be able to “spend it all in one place”, so to speak. It’s a system that can provide long term security for people, particularly after a very trying event.

But this doesn’t work for some people. Some individuals will do a lot better if they’re able to spend their money all at once. They have ideas for starting businesses, buying homes, going to school, and other worthy expenditures which require a lot of money up front. For these sorts of people, a structured settlement would be a life-changer, if only they could get access to the money all at once.

Individuals actually are able to sell structured settlement payments, to a variety of companies around the world. An annuity sold can jumpstart a lot of money-making strategies, or it can help in other ways. Some people have crippling debt, which is accruing interest charges faster than it can be paid off. Getting access to your structured settlement or annuity lump sum is an integral part in getting plans like these off the ground, plans which will benefit your life, and the lives of the ones you love, for many months or years to come.


So if you find yourself with a payment structure like this, for whatever reason, consider whether or not selling the payments would be a good choice for you. It could help you a lot for many years to come. But it’s also important to shop around, to make sure you’re getting the best deal. Whatever you decide, it should be a positive impact on your life.

source: everybodylovesyourmoney.com

Superb examples to explain you the concept of structured settlements

The mention of structured settlement might not be an entirely new term for you, but you wouldn’t be the only one who doesn’t yet have a crystal clear idea about exactly what these settlements are. Structured settlements, annuities, plaintiff, and defendant – all these terms could sometimes flummox you. The best way to understand the concept of structured settlements is to do so through the understanding of examples that are closer to real life than the legal jargon with is generally used to explain the concept. In this article, we try to drive home the idea of structured settlements through some fictitious examples of events which you are more likely to easily understand and envisage.

An elderly lady being badly injured in a road accident         
        
Take the case of an elderly lady, driving back from her daughter’s home in the evening. A reckless driver speeding an SUV from the wrong side rams his vehicle into the lady’s car. She ends up in severe pain, and a life threatening situation because of the injuries and blood loss. In the hospitals, the doctors declare that acute hip injuries would render the lady incapable of moving freely. The court awards her a structured settlement, under which she is entitled to get $3,800 per month, for a period of 15 years, beginning the next month. Also, the car insurance company is liable to pay her an amount of $500,000 in lump sum, when she turns 70.

This is a good example to make one understand how structured settlements can provide for a victim’s care for a long period of time. Also, the regular repeat payment amounts tend to be large when the time of the settlement scheme is not too long.

A 10 year old boy being badly injured in a dog attack

Johny, a bright young boy, was strolling around the park when his neighbor’s burly dog went mad and attacked him. In the attack, Johny had his face severely scarred, and also suffered fractures resulting from a fall during the struggle with the dog. The court decided that the dog owner was, without a doubt, liable to provide settlement amount to Johny and his family. The dog owner then sought the services of a structured settlement company, which further bought a structured settlement from an insurance company providing annual payments of $25,000 for a period of 5 years, beginning when Johny would turn 18. Also, the dog owner had to give an amount of $100,000 in 4 bi-yearly payments over the subsequent two years.

The above case shows how the structured settlement can commence from a later date in the case of the beneficiary being a minor.

A factory worker losing his life because of an accident in the factory

Mark, a 40 year old laborer, was working near the furnace when it suddenly started spitting flames. The fire extinguisher fastened to the adjoining wall was not working at all. An unfortunate Mark fell victim to the fiery flames. Thankfully, the fire was soon controlled without further damage. The court held the company in whose factory Mark was working responsible for the untimely death of the man, and awarded his wife a structured settlement under which the company was obliged to pay a sum of $40,000 per month for the subsequent 30 years. Also, his wife was given the flexibility to seek higher payments with 6 months prior notice to the settlement company, to provide for her medical care when she grew past 50. Now, after 15 years of the structured settlement period, the company issuing the payments goes bankrupt, and has to be liquidated. Mark’s wife is worried about whether she would continue to receive the settlement amounts.  Thankfully, the state government ensures that the company pays all outstanding payments to the intended beneficiaries from the receipts of liquidation.

This case exhibits how structured settlements can prove to be long term stability solutions for the families of victims of accidents. Also, these settlements are flexible enough to provide for contingencies.

The above mentioned three cases exhibit a lot about the circumstances under which a court can grant structured settlements to individuals. In such situations, the court generally tends to choose settlement mechanisms that provide for long term care of the victim, or the dependants of the victim of an accident whose responsibility can be attributed to an individual or a company. Moreover, these cases also amply exhibit the kind of amounts, and the time periods involved in structured settlements. Also, the fact that even if a structured settlement company goes bankrupt and has to be liquidated, the obligations towards structured settlement beneficiaries have to met first, is explained succinctly.

source: everythingfinanceblog.com

5 Reasons to Sell Your Structured Settlement

If you settle a lawsuit or insurance claim, you might agree to a structured settlement and receive your money in periodic installments. This approach has financial benefits, as the amount received through a structured settlement is often more than a lump sum payout.

But while taking your money in installments may seem like the safe, logical choice, there are sound reasons to sell structured settlement and get your money all at once.

1. Pay Off Debt

If you have a lot of high-interest, outstanding debt, selling a structured settlement can provide cash to completely pay off these balances. With debt no longer hanging over your head, you’ll enjoy peace of mind. Plus, paying off consumer debt can raise your credit score. Use the money from a structured settlement to pay off credit cards, auto loans, personal loans, student loans, back taxes and other debts.

2. Financial Emergencies

Maybe you don’t have a solid financial cushion to weather a financial crisis, such as a job loss or a major illness. The lump sum you receive by selling your structured settlement can help pay bills if you become temporarily or permanently disabled, as well as cover expenses if you develop an illness that prevents work. Then again, maybe your health insurance doesn’t offer the best coverage, leaving you with huge medical bills. Sell your structured settlement and get creditors off your back.

3. Purchase a Home

Buying a home isn’t cheap, as many lenders now require at least 5% down plus closing costs. This creates a financial burden for prospective homebuyers. It can take a year or more to save the cash, but fortunately, you don’t have to delay your plans. Because selling a structured settlement can put cash in your pocket, you can realize your dreams of ownership sooner. And with a lump sum, you can possibly put down a larger down payment, thus lowering how much you need to finance.

4. Start a Business

If you have dreams of being your own boss, selling a structured settlement can be the boost you need to start a business. The payments you receive on a periodic basis may not be enough to get your venture off the ground. However, a lump sum may provide adequate funds for advertising, purchasing equipment, renting a commercial space and handling other business expenses.

5. You Simply Changed Your Mind

After some time passes, you might regret the decision to spread out your settlement payments. No worries. Sell your structured settlement and manage the cash yourself. You can deposit the money into a high-yield savings account, a certificate of deposit or a money market account and grow your personal wealth.

Although there are many smart reasons to sell your structured settlement, make sure you fully comprehend the consequences of this decision. Periodic structured payments are tax-exempted, however, this all changes when you take a lump sum. And if you invest your lump sum, you’ll have to pay taxes on the interest.

 source: everythingfinanceblog.com