What Is a Structured Settlement?

You have probably heard about structured settlements on television, but do you really know what they are? Unless you have been in a situation in which you would be eligible to receive one, chances are slim that you understand what they are and how they work. If you might receive one or are considering one now, it is important you understand exactly what it is.

What Is a Structured Settlement?

A structured settlement is an agreement between the plaintiff and defendant in a personal injury case. The plaintiff agrees to accept payments according to a schedule from the defendant instead of a lump sum payment. The settlement payments could be spread over years. A structured settlement can be setup to pay out in a variety of ways. For instance, you could agree to start receiving payments 15 or 20 years from now. You could even arrange for your payments to start after you retire.

What If You Need Your Money Faster?

If your financial situations and you need to get the money from your structured settlement now, you do have the option of going through a factoring company. You would enter an agreement with the factoring company in which it would receive the money owed on your structured settlement. The company would give you a lump sum payment minus fees and interest.

Most states require that you attend a court hearing before the agreement between you and the factoring company would be approved. During the hearing, you would have to prove that you financially are in need of the settlement. The hearing is designed to protect you. Some companies charge a lot of interest and fees. The court’s job is to ensure that the amount charged is reasonable and that you fully understand the agreement. If you are involved in a personal injury claim and you would be willing to settle for a structured settlement, talk to your lawyer about it. Your lawyer can help you consider all of your financial options.