Understanding Structured Settlement Funding

Mar 17, 2010

How many people use their DVR to fast forward through the commercials? Many people do now, but if you’ve actually watched live television and have seen some commercials, you’ve almost certainly seen a commercial about structured settlement. There are a number of commercials on the airwaves about structured settlements and how you can use them to get money “now”. But what, exactly, is a structured settlement, and how does it work? These are questions that you should definitely ask before you enter into a structured settlement with any company.

What Is a Settlement?

If you were in a lawsuit with a company or an individual, you may have received a settlement. A settlement is the amount of money that is due to you from the company or person you sued in order to help you to pay medical bills, debt, or to help by easing your distress. Contrary to what most people believe, the amount of money that you receive during a settlement is sometimes not given to you in one lump sum. After all, if you were to receive $100,000 from a small company, chances are pretty good that they do not have that kind of cash to pay you off immediately.
That is why most judges will tell the company or the individual that they have to pay a certain amount per month or per year until the amount that they owe you is paid off. While this is great for the company who is paying the money, it isn’t necessarily a great for the plaintiff, who often needs that money in order to pay mounting debts or to pay off medical bills.

Structured Settlement

Selling your structured settlement is a way to get the money that you need from the settlement in one lump sum. A structured settlement buy out is offered to you by a funding company, often one who specializes in structured settlement or lawsuit funding. They will give you one lump sum for your settlement, allowing you to pay your bills off and to have some of the money that is due to you at one time. There are, however, a few things to know about a structured settlement.
The first is that, when you sell your settlement to a company, which is what you are doing when you sell a structured settlement, you will have no more rights to it. You will not receive money again from the company that owes you money – the only money you will receive is from the company that you sell the settlement to. Another thing you should know is that all companies charge a rate in order to provide this service, which means that you will be receiving less of the settlement than you would if you were to wait for it all to arrive. Waiting for the money can give you more, but it won’t come any faster. Many of the companies charge different rates, so make sure that you shop around before you settle on one company.