What is Structured Settlement Funding?
In wrongful death and personal injury cases, structured settlements have become a popular form of settlement over the past three decades. They can become a great tactic of financial security for a lifetime following a tragic event if tailored to individual needs and the amount granted to that person. However, these requirements might alter at times. Owners of structured settlements will then have choices for more rapid money access.
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An inventive way to compensate injured victims is using structured settlements. Since 1982, the US Congress has permitted structured settlements, which are:
- Defendant and the injured party formed an agreement voluntarily.
- A victim of an injury will not receive compensation for their injuries in a large payment under the structured settlement; instead, they will receive a continuous series of payments, usually tax-free. These payments were specifically designed to cover future medical costs and bare necessities.
- A structured settlement can be agreed upon privately in a pre-trial settlement or by order of the court, which is common in decisions concerning minors and incompetent individuals.
The US Congress in 1982 made it possible for accident victims to receive guaranteed, recurring compensation as an element of their settlements. Earnings from structured settlements are now tax-free because Congress understood the importance of giving injured victims a reliable revenue stream. When using a structured settlement to settle a percentage of your claim for damages, you will use dependable annuity payments to cover predictable costs like rent and continuing medical expenditures.
Should You Get a Structured Settlement Loan?
Long-term financial and personal repercussions may result from choosing between structured settlements and a lump-sum payout. Here are a few things to address when you speak to your financial advisor or attorney:
- What are your tax duties?
- How do you plan to be using the settlement funds?
- Do you possess the know-how to handle a large payment?
- Are you more likely to spend a lump sum payment on luxuries or risky investments?
- Will family and friends ask for help from your settlement amount?
Getting the Best Advice
Your lawyer will likely offer valuable advice and discuss the settlement’s conditions for your benefit. Suppose you opt for a lump-sum payout or a structured settlement. In that case, it is wise to speak with a tax expert, financial planner or accountant to find out how your award or settlement’s structure can enable you to maximize your benefits based on your situation and fulfill your financial objectives.
The Difference Between Pre and Post-Settlement Loans
Pre-settlement loans are settlements granted to plaintiffs in litigation that are pending an out-of-court or in-court settlement. It is essentially a non-recourse cash advance taken from the ultimate settlement of your lawsuit. You will not pay back such settlement loans if you did not win your lawsuit; the settlement funding company assumes the risk rather than you when providing you settlement financing.
Post-settlement loans refer to a sort of support provided to those who have previously received a settlement and haven’t yet received any cash. This kind of settlement financing is perfect for individuals who have to cover their expenses between the completion of their lawsuit and the receiving of their settlement. This is important because it might take several months to acquire funds after a lawsuit settles.
You, the plaintiff, would not pay back this money in any circumstances. Instead, it would be paid back out of your overall settlement.
The other significant differences between pre and post-settlement financing are as follows:
- Pre-settlement financing is a cash advance against an ongoing lawsuit and is typically more expensive due to the financing company’s heightened risk.
- A cash advance, also known as post-settlement financing, often made against the future award funds from a lawsuit that has already reached a settlement. This kind of investment carries a lower risk for the financing company.
- As opposed to pre-settlement financing, post-settlement financing does not involve any projection of a prospective settlement. The plaintiff will get a certain amount of money, as approved by the court. Companies involved in post-settlement loans basically buy all or a portion of the settlement funds.
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Apply for Settlement Loans Today
It is completely up to you whether you choose a structured settlement lump sum payment or a pre-settlement cash advance. High Rise Financial is a legal funding company that can provide plaintiffs with settlement loans. At High Rise Financial, we will discuss your alternatives with you. If you would like to get in touch, call us at (866) 407-6404. We have a whole team of extremely qualified and efficient workers who will answer any questions you may have.