In essence, a structured settlement is a schedule of payments received over a period of time due to a reason such as lottery winnings or compensation for injuries and/or damage sustained. The structured settlement is an agreement of installment payments as compensation over time. Cash for structured settlements is necessary when when the long term payouts are sold upfront in exchange for an agreed amount.
One of the major factors for structured settlements is time. The payout, instead of doing a one-time amount, is broken up into smaller amounts paid in increments over time. This presumes that the recipient would be in a state of suspended animation over the period of time when the payouts are received. In reality, there are times that the recipient’s personal circumstances would take a turn for the worse, making the need for finances an immediate concern. Thus, when a certain financial issue arises in the life of the recipient may force their hand to give up a sure thing for a short term financial gain.
Ways to receive structured settlement cash
This is where cash for structured settlements would come into play. In this situation, the structured settlement would be valued as an asset that is either transferable or alienable. This means, the payouts received would be assigned or sold to a third party in exchange for upfront cash. There are two ways that cash for structured settlements can be received, which are as follows:
- Sale of Structured Settlement. This is done through the actual sale and transfer of title as recipient of the payouts in the structured settlement. Because of the legal nature of the structured settlement, alienating the asset through the sale requires compliance with laws and regulations before being considered as a valid sale. While it is a bit tricky, it is not impossible to be done.
- Loan of Structured Settlement. This option is done by using the asset as security for payment of the loan taken out. In essence, an advanced payment is given for either the whole or part of the payout schedule and the amounts covered in the said schedule would be given as payment of the principal and interest of the loan obtained. This is the most commonly used process with cash for structured settlements agreements as there is no transfer of ownership of the structured settlement.
In these two kinds of cash for structured settlements, the common quality would be the receipt of a lump sum amount in exchange for the structured settlement. In cash structured settlement agreements, the value of the payouts are advanced albeit at a lower amount as what can be realized if the agreement would be allowed to be carried out its full course.
There are certain pitfalls though that needs to be avoided. These pitfalls concern itself with the legality of the transfer or assignment of any or the full value of the structured settlement. In cash structured settlements, there must be an approval obtained from all the parties concerned signs off on the action to be undertaken. Depending on the original structured settlement provisions, there must be full compliance of all the requirements set forth under the law in order to make for a valid transfer of assignment of the cash structured settlement.
The receipt of cash for structured settlement must be decided upon by the recipient with full knowledge of the purpose as well as full compliance with the legalities. Once a cash for structured settlements agreement is entered into, its ramifications would cast a shadow over the recipient’s life permanently. Once done, a cash structured settlement cannot be undone. If done improperly, the result would be the diminution of the asset in the long run.