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Structured Settlement Loans

What are Structured Settlement Loans?

First, there is nothing called “Structured Settlement Loans”. What you are actually looking for is a one time, immediate settlement payment, for the proceeds you are going to receive over the upcoming years, as monthly or annual payments. You are choosing immediate value of money in hand, over larger value of money in the future. So, instead of calling it Structured Settlement Loans, we should call it structured settlement funding, or, structured settlement payout.

They are also known as various other names as well, like lawsuit advance, lawsuit loans, third-party consumer litigation financing, pre-settlement loans, non-recourse advances and alternative litigation financing. But, to exercise this option, you need to first search for a structured settlement company, actually multiple of them, get quotes from them, compare the offers of their Pre-Settlement Funding, and then choose one that suits you the best.

First, let’s understand how structured settlement payouts happen

Structured Settlement Loans

If someone has won a court case on personal accident or injury, worker’s compensation, wrongful death of a close person, or a large financial benefit, the payer of such compensation may settle to pay it as an annuity, that is, a fixed payment at a particular date every year. These payments are tax free, and are not anyway related to your credit score.

Now, for some reason or the other, you may not be interested in annuity payments, and say that "I have a structured settlement but I need cash now."

Your reasons may be various, like need of lump sum cash, annuities too small to be of interest to you, medical emergencies, house improvement, taking care of debts and debtors which may have been accumulated, kids education, working or fixed capital for business, seed capital for entrepreneur ventures, etc. People also opt for this option to get out of repeated financial calculations, and obtain peace of mind. This definitely is a very very good reason, as it also helps you to improve your health, reducing your hypertension.

Here, you need a structured settlement company, who will buy out your structured settlement payout from the insurance company, and give you a discounted, one time, single payment.

You can also sell your structured settlement funding partially. That is, say you have a structured settlement funding with 10 years annuity. You choose to sell only the first 4 years of it, and take a one time settlement. After four years, you start getting your annuity payments, as decided in the court. When you contact a structured payout settlement company, they generally give you multiple options, covering partial and full buyout of your structured payout. Please note that all such arrangements will need to reviewed and approved by a judge, whose has the final authority. Your life expectancy, standard of living and future financial needs are taken into account by the Honourable Judge and generally, the process is completed within a couple of months.

Should you cash out, or should you go for a structured settlement funding?

In plain time value of money calculation principle, and if you are okay not receiving lump sum cash in hand together and immediately, the answer is No.

The reason is simple. Another company will buy out your structured settlement funding, which means, they will receive your annuities in the future. But they will have to give you now. They will have to adjust for interest and inflation. Apart from that, they will also have to take care of their costs, and also make a profit to survive. So, you will, in real terms as well as in adjusted terms, receive less in a structured settlement funding buyout, than if you choose not to sell your structured settlement funding payouts, and receive in annuity. You may receive 25% to 50% less in real, direct, dollar to dollar terms, and also lose your future income security.

But, more often than not, people are in need of immediate cash more than in the future, especially if they do not have fixed jobs, and be in independent earning activities. A few such reasons are given towards the beginning of this page. So quite a few individuals opt to take this route and get immediate (say within 60 days), onetime, large payout, and forgo their better, but future incomes.

Does structured settlement funding or structured settlement payout help you get loans?

Yes, of course! When banks see a credit, along with guarantee of future annuity credits, it immediately increases your loan paying capability, and calculations would enable them to offer you higher loans, as you will be able to service bigger EMIs. You will not be able to sell your structured settlement funding annuities though, till such time you are servicing the loan, mortgage or otherwise. In fact, one of the best ways to cash your future structured settlement payouts is to get an increased mortgage loan, citing the future income annuities.

Want to look for structured settlement funding companies?

Always reach out to as many as you can (this is of tantamount importance), as their rates vary widely. Their terms and offers also vary. Then, compare all the offers, and make an informed decision, considering all pros and cons. You can search for the top structured settlement funding loan companies in the Google search box below, and get in touch with them. Spend over 20 hours to study the different offers, and you should also get quotes from at least six to ten companies. Mention your area in the search, for better results:

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