Structured Settlement Loans

After winning a personal injury case, structured settlement loans are a practical way for a plaintiff to receive the money rightfully coming to her. Malpractice, wrongful death and personal injury are often inflicted upon unsuspecting people at the worst times. No one wants their doctor to commit an error and leave them debilitated for life. Losing a loved one in a wrongful death is a tragedy so grievous that few can fully comprehend or truly empathize. Apart from being devastating, many of these situations are also costly. Insurance companies are still businesses trying to make a profit, so getting payment for the injury or death sometimes proves quite complicated for the victims or their loved ones. Not only that, many times the cost of living requires that the plaintiffs commandeer cash for structured settlements awarded by the court.

When insurance companies and financial institutions agree on a settlement that is quite large, they usually opt for a structured settlement. This allows them to pay the beneficiary in periodic payments on either a yearly or monthly basis. Like everything else in life, there are good points and bad points to receiving a court settlement in payments rather than one lump sum. If the beneficiary decides against cash for structured settlements, choosing the periodic payments can avoid the substantial tax burden of receiving such a large lump sum. Even with the best intentions, beneficiaries that opt for structured settlement loans can squander the money, then have no viable means of earning income if substantially injured or impaired. Choosing a payment plan can help avoid this common pitfall, by turning the awarded settlement into a type of income stream. Though perhaps the agreed upon award translates into a small monthly amount, it is still a reliable and steady small monthly amount. Also, when opting for structured settlement loans, the lump sum is smaller, sometimes significantly smaller, than the total amount of the payments within the periodic payment schedule set forth by the court and agreed upon by the insurance company or financial institutions.

With all of the benefits to the periodic payment schedule for awards, why would beneficiaries ever choose cash for structured settlements? There are quite a few advantages to choosing a lump sum. In opting for a lump sum, the beneficiary is essentially selling or transferring the annuity set up by the insurance company or financial institution to pay the periodic payments. Selling a court awarded annuity can be legally tricky, so sometimes the beneficiary transfers ownership rather than sells it. Basically, the beneficiary of the court awarded annuity agrees to sell his future payments for a lump sum that is less than the amount of the payments. For example, Joe Smith can choose to sell his remaining ten payments of $100 for $850. If he had chosen not to sell, he would have received $1000 by the end of the tenth month. Instead, he opted to receive $850 right away.

For obvious reasons, a family devastated by court fees, medical bills and the loss of an income would find it helpful to receive a large lump sum up front to cover bills, pay off debts that would prove too high with the loss of future wages or begin a business venture that would be better suited for the individual who may now have limitations as a result of the injuries they sustained. There really is a trade off, as the periodic payments remain static, despite inflation. This means that each payment would have less real value in the changing economy. On the other hand, obtaining the lump sum will cost a fraction of the original claim award. Not only that, but there are often taxes that need to be paid on large sums of money that would not be due on the periodic payments.

To reach a state of balance, many law firms suggest partial cash for structured settlements. The beneficiary can sell a portion of the future payments at a discounted price, while still leaving the rest of the attempt to avoid them. A beneficiary should research the company offering to buy the payments. Is it a financially sound business that will be able to pay the lump sum once the future payments have been transferred? There is a 4 to 6 week period of time between transfer and the receipt of funds from structured settlement loans. If the business is not sound financially, that 6 week wait may yield only disappointment. Do they conduct business with integrity? "For kings, and for all that are in authority; that we may lead a quiet and peaceable life in all godliness and honesty." (First Timothy 2:2) This will have a large bearing on how hard they fight to get the plaintiffs the most cash for structured settlements permissible by law. It is highly advisable to seek legal advice and services when opting to sell all or a portion of the future payments. In many states, selling annuities is prohibited. In these situations, only an attorney can plead the case in court to try and obtain the right to transfer ownership of the remaining future payments from the injured plaintiff to the payer of the lump sum. Then the periodic payments would begin again when they were originally allotted for. Injured plaintiffs need to be aware of the pitfalls in structured settlement loans in an effort to avoid them. Lawyers can also advise an injured plaintiff on options he may not be aware of. Informed decisions are the only ones worth making.

Structured Settlement Money

Structured settlement money is a phrase that buyers of the formal financial agreements throw around describing a financial agreement that is an annuity, real estate note or perhaps a lottery jackpot. With the changes that life often throws at us, individuals who have a structured settlement often need to trade in a monthly income check for a lump sum of money. While a lump sum can be used for anything, most often a medical, educational or real estate need prompts the holder to sell the income producer for a one time lump sum of cash. In the case of a personal injury lawsuit judgment, structured settlement money is provided by the insured's indemnity company in the form of an annuity that will provide monthly income, often for life. An annuity can also be purchased by an individual to provide monthly income for a set amount of years or the lifetime of the holder.

The injured party in a tort lawsuit that is won will often will sit in a room with his attorney and listen to the structured settlement experts from both sides offer an opinion on how much he or she will need to live out their lives or the next ten years without the income producing abilities once enjoyed. Arguments will be produced as well as forecasts about future medical expenses, including surgeries and therapy. In the ensuing weeks, an agreement will be hammered out regarding structured settlement money. In the end, rather than pay out a large lump sum to the plaintiff, the insurance company will buy an annuity that gives the injured individual monthly income, usually for life. And for the person closing in on retirement age, the choice may be to take money from an IRA and buy an annuity that will also provide monthly income for the rest of his or her life, or for a set amount of years taking away anxiety over market or economic conditions.

Structured settlement money may also be part of a lottery jackpot payout that was agreed to right after the winning numbers were announced. Payouts over a long period of time pay out much more than a lump sum agreement, and for the prudent individual often appear to be the best economic choice. Structured settlements provide true security, it takes away any temptation to quickly spend the money foolishly or thoughtlessly and it can also take away the big incentive for "sudden new friends or loving relatives" to hang around looking for a piece of the pie. Few walks of faith make authoritative claims, giving rise to the strong reactions that many people have regarding the very restrictive claims of Jesus Christ. But the Bible is very clear on this matter: "And this is the record, that God hath given to us eternal life and this life is in his Son. He that hath the Son hath life; and he that hath not the Son of God hath not life." (1 John 5:11-12)

A buyer of structured settlement money will also look at mortgage notes held by an owner. Suppose, as an example, that the owner of a house cannot find a high qualified buyer, so he works out a deal with a renter to lease the house out with an understanding it will all go toward the purchase of the house. But the day often arrives in the life of someone when larger issues loom and the monthly structured settlement money almost appears to be taunting the recipient of what could be if all the money were in his hands at one time. Perhaps there is a needed surgery or the desire to take an extended trip or the need for a new roof on the house that begins to make having all one's money in hand more desirable than having a small dole each month. When that day arrives, the owner of the structured settlement money agreement will begin looking for a buyer that can provide a lump sum payment. There are some quite common complaints about some of these providers, especially in the discussion of how long it takes to get one's lump sum payment. With this in mind, a person should do a lot of investigation to understand a buyer's track record and looking into the Better Business Bureau to uncover complaints about the company and also how those complaints were handled is advice encouraged to be taken.

When the buyer of structured settlement money has been found, there can often be what might be called reverse sticker shock experienced by the seller of the annuity, lottery winnings or mortgage note. It's the reverse of car sticker shock because of how little the seller will actually receive from the structured settlement sale. However, there are several reasons why a buyer will only give the seller between 40-60% of the full value of the settlement. Any structured settlement will have some long terms factors written into it and that immediately poses high risk for the buyer. A ten year annuity or mortgage notes have a long time to see inflation, deflation, world events, recessions and perhaps the failure of the annuity company or the renter to continue paying. The huge uncertainties of holding a structured settlement agreement in return for a lump sum of money brings the hard business person out in any buyer of this type. Make sure that you trust this buyer and be ready for the hard decision of taking such a great loss for the convenience of in hand money.

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