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What is a Structured Settlement

By Edited Nov 13, 2013 0 0

Structured settlements are very common in the United States. A Structured settlements is when you sue a company or individual and win a large sum of money. After the judge rules in your favor the defendant or more probably their insurance company may propose a Structured settlement. A structured settlement is when they make you payments over time as opposed to one lump sum.

A structured settlement is generally paid annually or biannually. A structured settlement can help out the person who won the sum awarded by the judge if they are bad at managing money. A structured settlement is an excellent item for a person who may have been severely injured in a car accident. They now will receive a set sum of money for so many years. If they would have been paid a lump sum instead of paid out over time with a structured settlement they may be in depression and spend the money all within the first year.

A structured settlement is also a good choice if you would like to reduce the amount of taxes that needs to be paid on the money you are paid through the settlement.

If a child or minor is awarded a large sum of money by a court then structured settlements are commonly used.

If you are good at investing money in real estate or business start ups then a structured settlement may not be the way to go for you as it will limit the amount of money you receive each year.

If you do get an annual payment as part of your structured settlement paid out for say 20 years you can get your money faster. There are many companies that will buy your structured settlement from you with cash up front. Unfortunately these companies generally only pay about 2/3 of the settlement amount. If you are awarded a million dollars you would lose out on about $333,000. The amount they buy your structured settlement for is negotiable and with many companies out there that buy structured settlements you can get them bidding against each other so you can keep more of your money.

When you are awarded a large sum of money then there is a good chance the debtor will offer a legal contract to pay you your money over a period of years in a structured settlement. A structured settlement can be very beneficial to both parties but you do want a qualified legal staff to go over the contract prior to signing it.



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