If you are looking to purchase structured settlements, you will first need to know some information about the topic. When a lawsuit is settled, the damages can be resolved with either lump-sum cash or with periodic payments also known as structured payments. Periodic payments come into picture when the settlement is very large such as personal injury, wrongful death of the family member and so on. In these cases, the court usually orders the defendant to pay the settlement money on installments over a period of time such as monthly pay out or yearly payout. A structured settlement is the periodic payment agreement that a plaintiff accepts to resolve the damage caused by the defendant. When people who receive structured settlement
payments need immediate lump sum cash for unexpected expenditures such as medical expenses, they can sell their structured settlements.
Many companies and individuals will look into a structured settlement purchase for investment purposes. They pay either a lump-sum amount to the seller or they make a series of cash payments. These companies will purchase structured settlement with the intention of making profit. Hence, the amount they pay is usually less than its actual worthiness. The one who sells the structured settlement also has to pay the transaction fee, which is usually around 10%-30% of the cash advanced. This is a normal fee that can be seen in many other types of investments as well. There are even fees for pulling out your money early from your retirement account.
Those who are interested in purchasing structured settlement can buy either a part of the structured settlement or the whole thing. When the company purchases a partial structured settlement, the plaintiff will continue to receive the remaining settlement amount as periodic payments from the defendant. However, when the company purchases all the structured settlements for one lump sum in cash, there will not be any further series of payments. Once a company purchases the structured settlement, the annuity will be paid directly to the company.
If you want to purchase structured settlements, look for a company who is a member of the National Structured Settlement Trade Association (NSSTA). NSSTA has a complete list of companies involved in processing these types of settlements. You can get quotes from different companies in order to get the most out of your purchase. These companies work as an intermediary between the structured settlement purchaser and the seller.
Purchasing structured settlement is not any easy task. Most of the states in the US have restricted the sale of structured settlements. One has to furnish the legal requirements to make this type of purchase. Hence, it is always better to consult an attorney before making any agreements. As a purchaser, you will be exchanging a lump sum to receive a series of payments. In order to protect your purchase and to get a good deal in a legal sense, always work with a reputable broker.
You will also want to have a clear understanding of the taxes associated with the buyout. The transaction is almost similar to a payday advance except the fact that the seller has to get a court approval to exchange the structured settlement with cash. In order to get court approval, the seller has to give a valid reason to do so such as to pay medical bills, college fees, and so on. When you hire a broker to purchase a structured settlement, he/she will take care of all the paperwork involved in the buyout. However, it is always better to have a thorough knowledge of the legal aspect involved in selling and buying structured settlements before making any agreement.
Like any other industry, there are lots of fraudulent companies around that claim to give a good deal. Hence, you should do a thorough research on the companies and check for their reputation and credibility before approaching them to purchase structured settlements.