A structured settlement implies that you need to wait in order to obtain the funds that where assigned to you in a lawsuit. The payments follow the predefined structure and you can not get the funds altogether. However, it is possible to turn your settlement into a source of funds. Following is a brief explanation on how to sell it in exchange for a suitable amount.
Certain lawsuits like a liability lawsuit or a wrongful termination lawsuit can end with a structured settlement. It is possible to obtain funds in exchange for the rights associated with it. There are companies willing to purchase your rights to collect your payments and will provide you in exchange a fixed amount in cash as a lump sum instead of the installments.
Why Exchange The Settlement?
Sometimes, small monthly amounts are not good for your financial needs. You may need a high amount of money for any purpose and selling your settlement will probably be cheaper than taking a loan. Or sometimes you may simply be unable to obtain financing through other means due to bad credit or income limitations. If that is your case, selling your structured settlement can provide you with the funds that you need.
The reasons why people sell their structured settlement are varied but all share common grounds that have to do with the urgent need of high amounts of money to cover particular needs. For instance, structured settlement sales are common for home purchases, home improvements, car or mobile home purchases, medical or dental expenses, trips, legal fees, etc.
How Does It Work?
The Process is quite simple: Usually, structured settlements are set by means of annuities that can pay out on a monthly, yearly basis or other types of periodic payments. Imagine that you have been awarded $100,000 and that in order to pay that amount off the annuity pays $10,000 every year. That means that you can make use of only a tenth part of the total amount awarded to you each year.
With the above example in mind, imagine that you need $35,000 for a car purchase or for home improvements. Taking a loan is too expensive or is not an option and you would love to be able to use 4 years of your structured settlement. Well, that is what you actually will do. The financial company can purchase the equivalent to 4 years of your structured settlement and provide you with the amount you need (probably some more) so you can afford the improvements or the car purchase.
The sell can be agreed in different ways so you do not resign the whole amount of each of the four years annuities but only a portion of the ten years annuities so you can still enjoy yearly or monthly payments that will only be a bit lower than before.
Limitations to This Type of Transactions
Each jurisdiction has regulations over these transactions and thus, you need to contact an attorney or financial advisor in order to find out whether you can obtain the funds that you need and how you can do it if it is feasible.
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