Loans For Structured Settlement
Loans for structured settlement can be a lifesaver to someone needing cash sooner than the court ordered payments can begin, or to someone who simply doesn't want to wait out the structured payment plan. Anyone who wins the lottery, a personal injury lawsuit, a wrongful death suit, or workers' compensation case that results in being awarded a large sum of money, the payment will most surely be set up as a structured payout. Laws have been passed to this effect so that people unused to managing large sums of money will be forced to budget expenditures instead of going on a spending spree. This happened many times before such legislature was passed. The funds intended to take care of a person's medical bills over a lifetime were spent in other ways and the medical bills didn't get paid after all.
Generally speaking, this system works well and is in the best interest of the receiver of the funds. However, in the case of an elderly lottery winner or winning plaintiff, it makes little sense to have payments stretching over twenty years. That person would rather have the funds now, and invest them for the benefit of his heirs. A structured settlement loan may be what that person needs. There are companies that will, for a fee, advance the full amount won to the winner, and accept assignment of the payments in return. This way the winner receives the money, and either the defendant or the state lottery commission repays the lender with the structured funds.
Structured settlements are a guaranteed source of funds paid to the claimant or his/her family on a tax-free basis, according to Section 104(a)(2) of the U.S. Internal Revenue Code. Structured settlements usually are set up in two parts. An up-front cash payment is made to the plaintiff/winner to cover immediate expenses, then the balance is set up in regular payments over a period of time. Sometimes there is a need for more of the funds to be available much sooner, and that's where loans for structured settlement come in. It must be kept in mind, however, that it will probably take about 90 days for the loan to be processed and funds distributed. Court approval must be obtained, although in most cases personal appearance isn't required.
Some companies offering loans for structured settlement will work with a client to buy all remaining payments, a partial number of payments, or a percentage of the payments. There are variables related to the payments that will determine what fee will be charged for handling the transaction. The financial rating of the insurance company making the payments, the size of the transaction and how far into the future the payments extend, all affect the amount the borrower will receive.
If the plaintiff has already received a few payments, and then something happens that makes him want to have the entire rest of the payments soon, one of these lenders can be brought into the picture for a structured settlement loan. Actually, arrangements can be made for a specific portion of the payments if that would satisfy a person's needs. Perhaps five or six payments would be enough to get a person through whatever difficulties have arisen, and then the regular payments could be resumed.
With so many ways to set them up, loans for structured settlement cases can fit the needs of just about anyone involved in this kind of proceeding. When the lottery winner or triumphant personal injury plaintiff is a young person, structured payments are a good thing. They will provide assurance that the recipient will have funds for a good many years to meet his needs and make investments that will assure a comfortable retirement. Since so many young people have little experience in handling large sums of money, the system is a safeguard. Some of them may not want to look into a structured settlement loan, but hopefully, there are wiser heads to advise them. Wisdom is indeed a much needed commodity. Scripture mentions it many times. "My mouth shall speak of wisdom; and the meditation of my heart shall be of understanding." (Psalm 49:3)
Anyone considering loans for structured settlement payments should, of course, consider carefully what they intend to do with the large sum of money they will receive. Lottery winners are usually written about in the local newspapers, and once it is known that the winner has been awarded this phenomenal sum of money, there will be all sorts of scam artists trying their best to relieve a winner of that money as fast as possible. The temptation to be caught up in a too-good-to-be-true scheme will be less if the money on hand is not so great. A structured settlement loan, if not really needed, sometimes puts common sense and planning for tomorrow way below the "wants" of today.
Future Settlement FundingFuture settlement funding can be a possible answer for someone waiting on a seemingly certain legal financial judgment but may be on hold for a year or more on final payment. Companies can be found on the Internet that will advance lawsuit funding and allow qualifying parties to get much needed funds ahead of the formal lawsuit judgment. In many cases, the payout can happen in just a few days and some companies offer a non-recourse risk alleviation policy. This policy enables the recipient to know that if something happens and judgment goes against the him, the money will not have to be repaid. Making this advance work for the lender are interest rates and advance commissions that will provide a handsome return on the advance offer.
Future settlement funding seemed to be the answer for the young woman who had been in a horrible car accident and was permanently disabled as a result. Her medical bills were causing the woman and her family to drown in an ocean of debt and the husband couldn't keep up with the household expenses plus the added medical bills. The other driver had been at fault, and the attorney expressed complete confidence that the family would receive a very high dollar judgment, but the defendant's insurance company kept stalling and a payout could be over a year away. The woman looked to a provider of settlement funding to help with the onslaught of unpaid bills. But there were a number of issues to consider. A person should soberly consider these words whenever making a decision. "Every way of a man is right in his own eyes: but the Lord pondereth the hearts." (Proverbs 20:2)
Ethical funders do not want a client to take any more money than she needs. The cost for such pay ahead kind of funding is very expensive. Part of the expense is paying for three or four day turnaround as opposed to the weeks needed for a loan to wrap up paperwork. So the woman had to decide how much money her family needed and not necessarily what they wanted. The family's credit history or present state would not be a question with a future settlement funding lender unless the family was in bankruptcy, and unlike a bank loan, there would be no upfront fees, no microscopic look by a financial institution and no monthly payments. Fees and interest for the future settlement funding would be taken out at the end when the final settlement was made.
Typically, a fund provider will have a group of attorneys look over the case to make sure there is a very high probability of judgment and payment. Not every future lawsuit settlement will qualify. But in many cases, a plethora of case types are considered for funding. Certain workman's comp cases, sexual harassment cases, a few types of divorce cases, and a number of other case types can be eligible for consideration. But the actual circumstances of the cases will be the deciding factor in whether or not the request will be considered. And almost no provider of future settlement funding will consider a case where the plaintiff is suing an individual.
The injured woman and husband absolutely needed ten thousand dollars for their immediate needs. The attorney has asked for ten million dollars, and was expecting to get about six, and would be taking about 43% of that for his assistance in the case. The ten thousand dollar future settlement funding seemed paltry but the pay back of that amount could quickly add up. Providers of these funding loans charge as much as twenty five hundred dollars for every ten thousand dollars loaned, plus an interest rate of 2-15% per month, depending on the company providing the money. Since there was the real possibility of the lawsuit continuing to drag out over eighteen months, the ten thousand pay back could very easily reach thirty thousand in total costs if nothing was paid on the debt during those months.
Very often, the real providers of these funds are not the company to which application or requests are made. Typically future settlement funding investors are never seen, and may consist of angel investors or hard money lenders. Angel investors, according to the Small Business Administration are usually upper middle class individuals who want to make a nice profit on their investment but also want their money to be used in a helpful, personal way. Hard money lenders are usually involved only in business types of "bridge loan" transactions but in tougher economic times may look for alternative means of investing and future settlement funding may be a possibility. These investors are the ones that usually dictate the high upfront costs and the high interest rates for future settlement transactions.
Not all funding agents get the money to a client in a few days. That should be a question asked in an initial interview with an agent. This industry is filled with scammers and businesses that have no idea how to really take care of its customers, so proceed with caution. Check with the Better Business Bureau and ask for a list of clients that have used the company's services. And there may be one more fly in the ointment that ought to be checked out before making such a move. It is a very distinct possibility that your attorney may not approve of getting a future settlement loan. Inform him or her of this inclination and see what the response will be. A person does not need an attorney of record angry with him.