A structured settlement factoring loan is an option when you receive a structured settlement that results from a personal injury lawsuit. A structured settlement is an award in which the victor of the lawsuit will receive periodic payments over a specified time. If this arrangement does not meet your current needs you may consider a structured settlement loan. To obtain a structured settlement factoring loan you will need to sell all or part of your future payments for a one-time lump sum of money.
Explanation of Loan
Structured settlement loans are a type of financial arrangement in which an individual can exchange the rights to future payments for a structured settlement "loan" or lump sum of cash. The money from the structured settlement paid to the lender or funding company as if you were making monthly payments to payoff the loan. This is an option that allows an individual who needs to pay medical bills or to make an unexpected payment easy access to the money that they need.
The prospect of receiving a lump sum of money instead of periodic payments over time may appear as a preferable option, but there are factors to consider. When cashing out a structured settlement, the annuitant does not receive the full amount of the structured settlement. In most cases, depending upon the payout structure and amount of the structured settlement payments, the annuitant can receive massive discounts on the future value of the payments.
A structured settlement factoring loan is approved by a state court as mandated by federal law. After approval and written order by the overseeing judge, the structured settlement funding company has up to 21 days to pay the annuitant. Most structured settlement loans take anywhere from 4-12 weeks to complete depending upon the state and funding company involved in the case. Most delays are caused by missing and outstanding documents.
- An individual's credit score and credit history are not used to qualify for a structured settlement loan. This means your current financial situation is not typically a consideration when entering into a settlement factoring arrangement.
- Research the terms that are associated with your lump sum settlement before entering into any type of financial arrangement for your structured settlement.
- Shop around to multiple companies before accepting a lump payment offer.
- State laws exist to ensure that the loan amount that you receive for a structured settlement is fair.