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.

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