Structured Settlements InformationWhat is a Structured Settlement?A structured settlement is one of the payout methods for cash settlements resulting from personal injury settlements, insurance settlements, lawsuit settlements, injury settlements, or other legal cash settlements.Structured settlements compensate the victim with cash paid out in a fixed-income stream with payments in installments spread out over a period of time. Instead of receiving payment in one lump sum, structured settlements spread out payments. A structured settlement saves the payee money from taxes, medical, or other financial costs, and preserves the value of the settlement cash. Structured settlements are arranged by attorneys for settlements out of court or can be ordered by judges ruling on settlement litigation.
How do structured settlements help me?Structured settlements can be very flexible, depending on the structured agreement that attorneys or judges set up. You can receive payment every month for several years and even pre-schedule payment increases.Federal tax laws protect you and your structured settlement from paying taxes on the structured settlement payments. Your settlement payment stream is excluded from your gross income for tax purposes, by federal law. Federal tax laws also protect you by making structured settlements absolute; meaning neither you nor your structured settlement provider can accelerate, defer, increase or decrease the structured settlement after it has been approved by all parties involved. This allows the payee to receive income tax-free payments and ensures that the payee will be financially cared for and not at the mercy of the settlement payer. However, once the structured settlement is approved, flexibility in altering the payment stream is limited or nonexistent.
What gualifies for a structured settlement?Structured settlements are usually used in cash settlements for injury cases like personal injury settlements, insurance settlements, lawsuit settlements, and injury settlements. These settlements can be the result of injury, workmen's comp, wrongful death, or other circumstances.Can I sell my structured settlements?Yes you can sell your structured settlements. Structured settlements are fixed-income, but the federal tax law, designed to protect you by prohibiting the acceleration, deferment, increase or decrease of structured settlement payments, can also work against you when you need cash.In January 2002, President Bush signed into law legislation that protects structured settlement transfers. This new law states that structured settlement transfers between a settlement payment recipient and a buyer of structured settlements - usually a structured settlement company or settlement factoring company - can be made with no tax penalties to either recipient or the buyer. This means that you can sell structured settlement payments and receive a lump sum cash payment, but still be protected from paying taxes. Thus the new law still protects you and the original intent of earlier federal laws encouraging structured settlements. What happens when I sell my structured settlements? When you sell structured settlement payments, you are selling the future payments of your structured settlement for cash. You are transferring ownership of those payments from you to the buyer of structured settlements. In return, the buyer of structured settlements pays you a lump sum cash amount for the number of payments you sell, and the buyer takes over collecting the payments. You have flexibility in the number of payments you can sell. You can sell all of your structured settlement payments, or sell a portion of them now for a quick cash payout, and wait to collect the other unsold payments at a later time. For more related information, click to learn about companies that purchase settlement payments or how you can sell structured settlements and find out more details about how to sell structured settlement for cash.
How do I sell my structured settlements?To sell structured settlements for a lump sum cash payment, you need a buyer of structured settlements. This buyer of structured settlements is usually a structured settlement company or settlement factoring company. These companies operate in what is called the cash flow factoring industry, sometimes also known as advance funding. This industry specializes in structured settlement transfers and buys settlements from people who need to liquidate their structured settlements in order to meet their financial needs.When you sell structured settlement payments, you sell the future payments from your structured settlements for cash. The buyer of structured settlements - the structured settlement company - pays you cash for the right to take over the structured settlement payments. This is not a loan because they are paying you for money you would be receiving anyway. Rather, they advance the funds you would have received overtime, so that you get your money now instead of waiting for your payments. After all, you may not have the time and can't afford to wait for those payments because of your financial obligations. Since you and your structured settlements are protected by law, the structured settlement transfer must be court-approved. Once you and the factoring company agree on the number of payments you want to sell, you will need an attorney to be sure all of your documents are in order so that the court can approve the transfer and expedite your payment. Learn more about how you might sell your structured settlement. |