Personal Finance

Congress enacted structured settlements in 1982 to insure monetary awards for personal injury victims were handled in a responsible manner. Many individuals are unable to appropriately manage a lump sum amount and then have nothing to repay living expenses or medical bills in the future. Distributing the money in payments assures the victim is compensated securely.

When an injury occurs, one may have long-term effects that prevent them from working or caring for their family’s daily needs. Structured settlements help provide for daily living expenditures and any required health care. If a victim has died, the guardian of any minor children will receive the payments to insure they receive proper care.

An upfront cash distribution is usually made to the victim for immediate expenses and a payment arrangement is scheduled by an insurance company for the remainder of the settlement. When an individual finds a need to have the cash sooner than reflected on the payment schedule or a large expense has incurred, they can receive a loan against the structured settlement. Elderly victims may want to withdraw and invest their money for future heirs. Stretching a payment schedule out over several years may not be in their best interest. Younger individuals may need the money due to illness, accident or loss of employment. Others may want to make a large purchase such as a home or pay for a child’s education.

There are a variety of ways a loan can be obtained. Companies will normally work with clients to buy the remaining payments or a set number of them. An individual may only need funds from 5 or 6 payments to get them through a financial difficulty. Fees are determined based on the monetary amount, the financial rating of the purchase, and the schedule accepted by both parties. Receiving a loan is not a quick process and could take up to 90 days. Applications have to be presented and approved in a court of law, but may not require the owner to be present.

Prior to obtaining a structured settlement loan, consult an accountant or attorney. Be sure any financial companies recommended specialize in legal funding, have an excellent reputation, and demonstrate years of experience. Talk to advisers who can help with the best quote and loan options tailored to your specific need. Once a contract has been devised, have an attorney look over the legalities. Beware of scams offering outrageous deals. The loan may sound good, but ultimately you can be left penniless. Only utilize legitimate agencies that can provide positive references and feedback.

Visit us for more information on structured settlement and also find out more about the Certified Structured Settlement Consultant.