Vital Cash for Structured Settlement Facts

If you've got a structured settlement and you need to get cash for it, take a moment to consider a couple of very important matters. First of all, it's pretty expensive (to you) to sell your structured settlements for money, at least over the long term. Most people don't realize how much it's going to hurt them and only focus on what they'll get with an immediate lump sum payout.



If you do decide to use a structured settlement brokerage company, you'll need to know a couple of things about the laws regarding this.

First of all, a structured settlement is the periodic payment of damages as arranged by a judgment or settlement to resolve a tort claim. Very often, these periodic payments are tailored and are set up so that they meet the needs of the victim in terms of medical and living expenses. This prevents the victim from having to depend upon taxpayer financed social medicine, welfare, etc.

Laws do protect consumers from brokerage companies that are unscrupulous. Most often, the settlement agreement also specifies a nonassignability clause. Basically, this is unenforceable, though.

It's been estimated that more than 50,000 structured settlements go into the system every year. These settlements give premiums to annuity. What's important to remember is that these premiums are highly favored in terms of the tax treatment you get, whether you are the claimant or the insurer. In turn, this lowers insurers' costs.

Price terms as well are usually pretty unfair to the consumer. In fact, some sales have been shown to be completed with a 12% or 15.8% discount rate, but oftentimes, the rate is as high as 55, 65, or even 75%. The discount rate is calculated on what the purchase price is going to be as well, meaning costs such as brokerage fees that the seller of the contract agrees to. That means that the real cost and rate of the transaction is much lower than the company states it is once everything is said and done. The seller does also not have to be informed of the total cost of the transaction -- at least in terms that are understandable. And because some of the transfer agreements are so unfair, it would appear that there needs to be something put in place whereby consumers are protected from factoring companies that take unfair advantage of them.

Some contend that structured settlement provide crucial financial protection to seriously injured victims, including: protection against premature dissipation of benefits for injured victims; periodic payments tailored to the living and medical needs of the victim and his/her family; and avoiding the shift of responsibility for the victim's care to the taxpayer-financed social safety net. They make the case that that there has been a dramatic growth in the number of factoring companies that are purchasing the future structured payments for a sharply discounted lump sum payment, "taking the structure out of structured settlements. This is a transaction that the injured victim enters into with a 3rd party, completely outside of the structured settlement and without knowledge of the other parties.

Because of this need, a secondary market has arisen whereby companies purchase a portion or all of the individual settlement for one lump sum payment. That lump sum is the result of the discounted present value of the payments the company is purchasing, using discounted rates that average currently between 16 and 18%. These discounted rates take into account the cost of capital, the company's profit, and any inherent risk involved in undertaking the settlement.

All of the careful planning and long term fiscal security for the injured person and his/her family are unraveled by the company offering quick cash at a deep discount for future structured settlement payments. After almost giving away their only assured source of future financial support, many injured victims will face the prospect of public assistance to cover their future medical expenses and basic living expenses.


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Understanding Structured Settlements

A structured settlement is usually an annuity set up for recipients of a financial award, normally due to litigation involving an injury or accident. If you are receiving periodic payments from a structured settlement or annuity, you may be interested to know that you can sell part or all of your remaining payments. Selling structured settlements is legal in all states.

You may need court approval in order to sell your payments, but it is your right to receive a lump sum of cash for your structured settlement if you so choose. Many people have found that the small monthly or periodic payments they are receiving are not enough to meet their financial needs or achieve their financial goals. Selling your structured settlement can give you the cash you need to realize your dreams.

You can use the cash for any reason you see fit. Remodeling, starting a business, college education, or any other reason you may have. You do not have to sell all your remaining payments. You can sell a certain number of payments, or you could sell a portion of each of your remaining payments.

You can contact the professional of your choice to help you analyze your situation and your needs, and determine how many payments you would like to sell. The large lump sum you receive in exchange can be a life-changing experience.

Selling your structured settlement is a simple process. You can apply online and a structured settlement expert who will give you an estimate of how much money you could receive in one large lump sum will contact you shortly.

Structured settlements often seem like a great idea until you realize that the small monthly payments do not make a big difference in your overall financial situation. Check into selling some or all of your remaining payments and you could have cash in your hand very soon.

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