About Structured Settlement Loans

While the term “structured settlement loans” may sound complicated, the truth is that loans of this type are easy to understand. Of course, as with any loan the key is to understand all the details. However, when you add in factors associated with a structured settlement, learning all you can is essential. Because a settlement such as this is a legally binding agreement, you would be bound by applicable laws. Therefore, you could not simply find a company from which to borrow money and call it done.

While the term “structured settlement loans” may sound complicated, the truth is that loans of this type are easy to understand. Of course, as with any loan the key is to understand all the details. However, when you add in factors associated with a structured settlement, learning all you can is essential. Because a settlement such as this is a legally binding agreement, you would be bound by applicable laws. Therefore, you could not simply find a company from which to borrow money and call it done. In fact, the annuity connected to the structured settlement is controlled by the court so to secure a loan the first step would be getting approval.

Payments from a structured settlement would likely be from one of two scenarios. First, money could be from a lawsuit filed after being injured by someone or a company being neglectful or acting with misconduct. Second, payments might be associated with winnings from the lottery. In both cases, rather than have everything go through the legal system, you would work closely with an attorney to reach an agreement known as a structured settlement outside of court.

How do they work?

As a part of a structured settlement you would have the option of choosing the frequency of payments, whether to assign a beneficiary, and if you want to receive any lump sums every few years. While it would seem that stress would be eliminated once the process to finalize the structured settlement has been complete, the truth is that most people in this situation are faced with significant financial responsibility. This means while waiting for payments from the settlement, medical bills, attorney fees, medication, and so on still need to be paid.

To get through rough times while waiting for the money, structure settlement loans are an option. With these loans, the settlement actually becomes the collateral. Therefore, the payments of the structured settlement would actually become the payments toward paying off the loan. However, if you chose a lump sum payout, once the money has been received the loan would be paid in full in one payment. With several caveats, always make sure to spend time researching different loan options so ultimately, the lowest interest and best rates are secured.

How do I get a loan against my structured settlement?

We strongly recommend you look at various financial institutions that specialize in structured settlement loans. That way, all the ins and outs would be understood and chance of being taken advantage of would be dramatically reduced. One important consideration is that payments from a structured settlement are not considered taxable income whereas the one lump sum payout would be. This means you would be responsible for tax liability with structured settlement loans. Another important factor associated with structured settlement loans is the amount.

While you might have an idea of what the exact payments would be, until the agreement has been finalized and everything tightened up through the court system, the exact amount remains an unknown. This means you might secure a loan expecting a certain amount of money from the settlement only to discover the payments are not enough to cover the loan payment. For this reason, consider a loan whereby payments would be less than you expect to receive from the settlement.