Creation, Sale and Purchase of Structured Settlement Annuities

creation and sale
A structured settlement is an agreement between parties which generally results in an insurance entity committing to make tax-free payments to an individual for an agreed upon period of time or for the life of the individual. Structured Settlements are based on a financial plan for immediate cash and future tax-exempt payments which take into consideration the future needs of the injured party. Structured Settlements are also designed by the plaintiff in order to maximize their settlement by receiving secure and tax-free payments.

Upon reaching a settlement which includes the requirement of future periodic payments, the Plaintiff often requires the Defendant to transfer its obligation to make these periodic payments to a subsidiary or affiliate of an insurance company (often referred to as an assignment company). The Defendant or its liability insurance carrier pays the assignment company an agreed amount of money in a lump sum in exchange for its agreement to assume this periodic payment obligation. The assignment company uses this lump sum to purchase an annuity from an insurance company which is often affiliated with, or a parent of, the assignment company. After the assignment, the assignment company or the insurer will make all of the periodic payments directly to the Plaintiff.

Each insurance company is regulated through state insurance commissions, who mandate the repayment of these annuities as claims paying obligations. In addition, each state has a specific limited guarantee or fund for repayment in the event that an insurance company is unable to meet their obligations. Physical, personal injury settlement payments are generally received tax-free by an injured person by reason of Section 104 Internal Revenue Code. With a qualifying structured settlement, the individual receives a tax-free accrual of interest for the life, or term, of the annuity. In this manner, the injured person becomes the payee of a Structured Settlement, which generates payments at a fixed rate, for a fixed term.

In some instances, the individual annuitant who is receiving periodic payments under a Structured Settlement desires to sell some or all of their future payments for a lump sum of money. The cash flows are sold at a discount in exchange for the lump sum payment, and this discounted Structured Settlement is available for sale to the Purchaser. This manner of securing the payment streams at a discount directly from the seller is how the Purchaser secures such favorable yields. Financial brokers normally facilitate this transaction on behalf of the seller (or annuitant) and the purchaser.

Purchase

The payment rights to the future cash flow can only be transferred from the Annuitant to the Purchaser pursuant to a court order process, mandated by state law. Financial brokers typically engage a legal counsel to meet the requirements of each state. Part of this court order process requires confirmation from the judge that the transaction is in the best interests of the Annuitant. A broker facilitates this process by working directly with the annuitants and local legal counsel. The local councel arranges for all the appropriate contracts and agreements between the seller and purchaser, ensures that all state and federal requirements are being met, and ensures that the insurance company or assignment company acknowledges or stipulates that the purchased payments are being redirected from the Seller to the Purchaser. Also, the broker arranges for the retention of independent legal counsel, who will be engaged to secure a court order approving the sale of the Structured Settlement payment rights from the Seller directly to the Purchaser. The court order will specify that all of the purchased payments are to be paid directly to the Purchaser from the insurance entity.

It typically takes 2 or more months to complete a purchase and sale transaction from the time that the broker reaches an agreement with an individual to purchase his or her Structured Settlement payment rights and when a final court order is obtained approving the purchase and sale transaction.

These transactions vary in size from approximately $10k to well over $1M in principal invested. There is also a wide variety of “start dates” and “end dates”, providing a wide range of cash flow durations. These cash flows are NOT volatile, and can be expected to be received as agreed to. Purchasers can choose which Structured Settlements meet their specific objectives. A Purchaser can purchase assets backed by different insurance entities, of different sizes, with different durations. Fixed Income Annuities can also be purchased for an individual investment portfolio through Self Directed Retirement Accounts. The Purchaser can choose an asset that has a specific start date, ensuring income in retirement.

In each state, there have been thousands of approved transactions where Plaintiffs have sold their lump sum payment. The market is established, and processes exist in each state to successfully complete these transactions.

The Internal Revenue Code, which exempts from tax the Structured Settlement payments being made to an injured person pursuant to a settlement, is not applicable to secondary market purchasers. Hence, the receipt of Structured Settlement payments is generally taxable to a secondary market purchaser. Investors should consult their own tax advisor as to the tax considerations that would be applicable prior to purchasing any Structured Settlements.

A fixed Rate Structured Settlement Annuity

A fixed rate structured settlement annuity is often created in connection with the settlement of a personal injury lawsuit. In a typical transaction, the defendant and plaintiff reach a settlement which provides for the plaintiff to receive periodic payments over a period of time.

The use of structured settlements has risen dramatically in the past twenty years. Previously, claimants were presented with the option of an immediate cash settlement, which created significant tax related burdens, and did not always address the long term needs of the plaintiff. Structured settlement growth is most attributable to the favorable federal income tax treatment that such settlements received as a result of the 1982 amendment of the Internal Revenue Code. These amendments approved a structure under which personal injury tort claimants could receive periodic payments over a term of years in settlement of their claim from insurance companies and assignment companies. These amendments confirmed that the personal injury tort plaintiff could receive the periodic payments under a structured settlement on a tax-free basis, including the ability to receive the “inside build-up” value or gain in investment value over the life of the payments. The Internal Revenue Code was also amended by adding new Section 130, which provided substantial tax clarity to insurance companies that establish “qualified” structured settlements and led to the creation of assignment companies that were affiliated with the insurance companies that issued the annuities.

The most significant downside for a plaintiff with a structured settlement comes from its inherent inflexibility. In ways unforeseen at the settlement table, the plaintiff’s financial needs often change over time resulting in a demand for liquidity options. Beginning in the late 1980s, a few small specialty finance companies started meeting post settlement liquidity demands by offering new flexibility for structured settlement payees through a lump sum cash payment to the plaintiff in return for some or all of the rights to the plaintiff’s structured settlement payments. During the late 1980s and early 1990s, certain legal and tax issues surrounding settlement transactions limited the growth of the assigned structured settlement market.

Tax Advantages of Structured Settlement Payment

If you are looking for more information on the tax advantages of structured settlement payment, here's an article worth reading. Structured settlement payments are a key part of any settlement between both parties and because it involves financial numbers, it automatically factor in some issues over taxation. Let this tiny bit of information illustrate how a long-term structured settlement payment agreement can give you tax advantages. When a person sues another person due to some sort of injury and wins the case, the claimant will receive monetary compensation for the loss through a settlement payment agreement. Before, settlements come in the form of a lump sum but this proved to be very demanding on the spot for the paying party. The solution in the recent rimes is the structured settlement payments which are gaining popularity because of its practicality and benefits for both parties. As a substitute to a single lump sum payment, the claimant will be compensated a monthly structured settlement payment for an agreed period of time Choosing such structured settlement payment series over the lump sum amount means a guaranteed source of long-term income for even a whole lifetime. One of the highlighted benefits of these regular payments is the excellent tax advantages that come with it. It is basically income exempted from taxes unlike the usual salary or other forms of income like royalty or dividends. For the record, there is no income tax on structured settlement payments since 1982. The tax savings itself makes this option of maintaining the long-term monthly payments very attractive. Over the entire period of the settlement, such savings is a big amount in itself. A decade ago, there are problems with issues on the burden of taxation over transactions of transferring or selling of structured settlements. Insurance companies asserted that their clients or even their companies are at the losing end with the dealings in structured settlement selling. When an individual sells the structured settlement payments, the annuity obligors suffer tax consequences. This became the source of several litigation in the past between insurance companies and settlement purchasers and annuitants. With the enactment of the Structured Settlement Protection Act, it will further benefit these individuals receiving the monthly regular payments. Such regulation also clearly mandated that annuity providers will also not suffer from further tax consequences as a result. The law clearly states that annuity owners and providers do not owe any taxes as a result of these transactions. Selling your structured settlement payments will make you lose many tax benefits in the process. Selling this guaranteed income has only an advantage of large yet single payment. Before deciding, it is best to consult with your financial advisor regarding selling your structured settlement payments. Your advisor will definitely help in defining with what you will lose in the process, especially the tax savings you will forego.

Life Annuity Structured Settlement Company

Are you looking for a life annuity or structured settlement company and not certain how to designate one? There are abundant factors involved in your cast around. Your chief apply to…. Appreciation what is correctly for you.

Check out the companies’ breeding and chance upon outside how estimable the company is. There are in fact those that would capture aid of the un-informed. Some structured settlement companies aim to load you when their payments achieve not advance in.

Those broken, as a rule accept delivery of a life annuity or settlement. Selling your settlement for cash may not breathe allowed. There may be alive additional reasons to conserve your settlement at the time that it is and not barter it. In some cases beguiling a lump amount may accord you slighter value than had you taken the payments. Interrogate the Structured Settlement Companies these questions.

1. What anent deferring the taxes in harmony to come to rescue?

2. What as regards my prospect and concealed needs, will I have any options for this?

3. Will the Configuration Settlement Company arrange gain with other benefits?

4. Are these options finest for me and my outlook needs?

5. How will I accept delivery of payments and acquire the most for my money?

Aye glance at the agreement ahead signing and let a lawyer clarify it. You have a abundance of options when dealing with structures. You may call for a annually discharge with lump sums approaching in quarterly. You may desire a lump amount to be alive cancelled in the prospect at a definite epoch. The configuration of your agreement is what you are depending on to acquire you locate up for the outlook. You desire the finest value tax benefits. The opener answer is in choosing the fair Structured Settlement Company.

Injuries catch our prospect plans and origin us to catch sight of alternatives for earnings. Choosing and making the fair choices can breathe hard. Companies who attend to with these cases create their earnings from the acquire of your settlement. It is valuable to comprehend the structured settlement company you are choosing. All state can crave specifics for that state, so there will changing degrees of the law. You may have a arrangement of annuities that are not barter adept. The clear gone on taxes changes with the choices. You may bail out taxes in a structured settlement nevertheless not in a cash amount payout. You may have to clear the complete the taxes when you accept delivery of the lump aggregate.

The following essential step to capture is ask advice of with a lawyer. The language of your agreement demand to be alive glance at by one trained. Interrogate admitting the life annuity is abundant for your settlement. Inquire in your appointment what happens allowing the company who bought your settlement and cancelled your cash cannot acquire their payments? Catch sight of outside allowing your Lawyer has any association to the Structured Settlement Company you are all things considered or that they advance. Inquire as regards the illogical, bereavement, and acquire your match to advancing to your estate. The level will decamp near to the Insurance Company admitting specifics are not stated.

Finding a structured settlement company can be alive a piece of cake when consequent these rules. Constitute your check for a company creative and you will determine accurately.

Not Ignore List for Selling your Structured Settlement

Structured settlement is a contemporary allowable admiration that has been appreciated by countries the complete accomplished the earth. It is a free from harm and assuring path of receiving what you be entitled to. You may have got your structured annuity by any assorted situations which escort to a structured settlement. Admitting you are planning to sell the structured annuity, you may have to be over yourself and inquire admitting you apprehend abundant to favourably entire the sale. There are copious facts without whose education; a seemingly acknowledged sale of a structured settlement can advance absolutely erroneous. Did you comprehend that some states in the US have restrictions on the sale of such structured settlements? Allowing you achieve sell your settlement without this education, there is a pleasant liability you will be alive denied in court. Ergo, it is absolutely valuable to assiduously enquire into the entire action of the sale of structured settlements ahead you carry on any additional.

It is along with during the time that essential to believe anent which settlement would chief agree your needs. You may determine from receiving an bulk cancelled in smaller divisions accomplished a season of time or you have the choice of receiving a lump sum bulk in one advance by selling your structured annuity. Nevertheless amuse conserve in attitude that whatever the lump sum bulk you accept delivery of by the sale of such structured settlements is aye lesser than the all expanse you would have got by auspices the settlement. For this reason prize gone your requirements and allowing compulsory, articulate to an adept who ability aid you designate the fair choice.

Structured settlements are designed in such a method that you acquire your compensation typically tax clear. Ergo allowing you chew over selling your structured settlement, you may have certain tax affiliated problems. A tax aide ability aid you catch a glimpse of the fair blaze in such cases. Be alive certain to chat to one and not to bury one´s head in the such contemptible nevertheless much denoting facts.

At the time that mentioned earlier, there are some allowable restrictions placed on the sale of structured settlements in some states. Abundant people bolt into federal limitations for selling such settlements without actuality acquainted of this event. It pays to sign that inexperience of law is not an absolve. It is appropriate to constitute certain that there aren’t any allowed barriers or if not that capability place you in a embed for selling your settlement.

How Getting Cash for a Structured Settlement Works

If you receive an award from your injury case, an attorney or financial advisor will likely recommend setting up periodic installment payments instead of giving you a lump sum of cash up front for your structured settlement. Then, an independent third party will purchase an annuity that will provide you with tax-free periodic payments.


Companies that offer cash for structured settlements have a variety of programs that can allow you to access any portion of your annuity. For example, you may want to sell as little as four year’s worth of payments or receive a lump-sum payment while still enjoying some portion of your monthly payment. Or you can sell your settlement for a large payment that is five or six years in the future. You can also customize an arrangement to get cash for a structured settlement based on your unique needs.


Here’s an example of how obtaining cash for a structured settlement works: Let’s say you were in an accident five years ago. The accident caused you to be hospitalized for several months and undergo nearly a year’s worth of physical therapy. So you hired an attorney and sued the responsible individual-or, rather, the person’s insurance company. Ultimately, your attorney advises you that you’ll be awarded a substantial sum of money.


After several months or years of negotiation, you receive a sizable settlement. However, the cash you get upfront is only enough to cover the medical expenses. The rest of your compensation is scheduled to be paid out in regular installments through an annuity over the next 15 to 30 years. Rather than being restricted to monthly or annual payments, you contact a settlement purchaser to secure immediate cash for your structured settlement. You’re then able to use the cash to enhance your current cash flow-rather than waiting on periodic future payments.

LOAN FOR STRUCTURED SETTLEMENT

If you won in a lawsuit, you are entitled to a structured settlement. As an award, the court will order the insurance provider or the company to pay you an amount which is just and reasonable. The money is a big help especially if you have lots of debts during times of appearing in court. You will be receiving an agreed amount either semi-annually or annually. The best thing about it is its ability to assist you financially. You don't need to worry of running out of cash for you will be receiving timely payments. However, sometimes people with structured settlements opt to go for a loan.

The loan is called structured settlement loan. Instead of receiving the money semi-annually for a stated period, you'll be receiving a lump-sum amount by providing your structured settlement as collateral. Many are doing it because of some financial emergencies like medical bills or other obligations. Some will be using the money to purchase a home or a car. What you will have is large amount of cash to purchase anything you want. Sounds attractive to grab, right? But before you go and get the loan, you should know the disadvantages of structured settlement loan. Sometimes, we only look for the positive side of things and we tend to neglect the downside.

If you really need big amount of money, I can't blame you if you will go for a loan. Large amount of money will be immediately yours once your application is approved. Sometimes, you are not contented for just a small amount but good for longer periods. Or in times of financial difficulty, we don't have any choice at all. One of the disadvantages of structured settlement loan is the lesser amount of money you will be getting in availing it. If for example, the settlement has a value of $20,000, don't expect to receive a full amount. There are charges imposed by the financial company and you are the one responsible to pay.

It all boils down to business profits. How will the lender gain income if there are no charges? Unlike other types of loans where you need to make monthly payments, in this case you don't need to. With the lump-sum money coming from the financial institution, you don't have to pay it back. This is because the lender will be receiving the settlement payments in return. The structured settlement loan is a form of assignment where your receivable will be collected by the lender. But try to analyze it thoroughly; it is you who is losing in this battle. You will not be receiving an amount worth of the settlement.

You will be paying for interests as well. The bottom line about the loan is the loss of money. So you better think twice about getting a structured settlement loan. It's not all about the advantages but you should consider as well the disadvantages. You must be very clear about where the money will go. If you really don't need the money, then might as well be contented with the payments for longer periods.

Benefits of Structured Settlement Programme

Structured settlement pan is a pre-decided investment plan; it is often called intermittent payment judgment. This investment plan takes place as result of a court case where there is a substantial sum of money to be paid out. Commonly the sum assured amount is broken into short interim payments and is paid to the propose rot policy holder in a pre-decided schedule. As per the terms and clauses of agreement, the payments can be made in monthly, quarterly, or in yearly basis. In some instances payments can be made in bi-yearly plan. The receiver of the payment is termed as payee or as annuitant.

There are several benefits for structured settlement plan. The prime benefits are jotted down here with outline details.

Structured settlement investments are tax free and this resolution goes for State as well as for Federal level. The income which is accumulated from structured settlement plan is not accounted as annual gross income and that is why it is not considered as taxable.

Structured settlements are more aligned to future security issue. Regularly, deposited amount received in the form of monthly income after a certain period asserts the policy holders especially for the senior people. This accumulated amount can be considered as an expense for child education. Most of the structured insurance companies have earned huge reliability due to their timely payment and good returns which has added a new feather of security with this mode of investment.

Structured settlement plans do not interfere with social security benefits. This money cannot be compromised in divorce suits and cannot be considered as assets to pay debts. This facility adds security and confidence for family future in case of worse situations.

Structured settlement plan do not involve lengthy court proceedings thus saves lots of funds because there is hardly any legal involvement in this investment plans.

Need of a Broker for Structured Settlement

In most of the instances related to structured settlements neither the recipient nor the defendant has an idea about the right price of the settlement plan. But a professional broker of this particular trade can helps both the involved parties to have a reasonable assessment of the plan cost as per market rate, which is based on current calculations and as on date projections. A structured settlement broker provides proper information about the proposed sale deal, which serves the purpose of basic platform of the going on negotiations.

The broker involved in structured settlement plan deal has multifaceted roles to play. A broker may work with the applicant or his appointed attorney and contribute actively in forming a frame for negotiations. Otherwise, the broker can act as a middleman especially when an individual takes a decision to sell off a structured settlement.

The expert broker of this trade may work is more elaborate ways. For example he may take the responsibility of the financial analyst on behalf of the applicant and may get involved in calculating the present cost of the to be sold plan, take the responsibilities to negotiate and communicate with Medicaid and SSI on requirement, and at the same time offer a relevant, cost effective tax planning with the recipient.

Ideally, a structured settlement broker presents in front of his clients a choice of payment preferences and can explain the utility and advantages of each of the options to his client on requirement. In fact it is the active and professional guidance of the broker and the attorney on which the applicant can take the ultimate decision on the sale mode and payment issues. In fact the professional assistance and advice of truly professional broker is highly acclaimed in the sale deal of structured settlement because this is a one-time deal and once it is settled, it cannot be modified.

How does Structured Settlement Work For Me

Have you brought a lawsuit against a company or an individual that you claim caused you permanent harm as a result of their negligence or intentional misconduct? (that’s just a fancy “lawyer” way of saying that you’re hurt and you say it’s their fault). Did you win or settle your lawsuit? If so, then you need to understand the basics about structured settlements, as it may be an important option to consider.

Ordinarily, when you win a judgment or settle your lawsuit the defendant has to pay you the judgment or settlement amount in a lump sum. Let’s say, for example, you have a form of cancer caused by asbestos called asbestosis. You sue the asbestos manufacturer, who agrees to settle out of court for a million dollars (don’t get excited or disappointed; this is just an imaginary amount for example purposes). You get a check for a million dollars, right?

That’s one option, but a structured settlement might make more sense depending on your circumstances. A structured settlement pays you in installments over time instead of a single lump sum.

Installment payments can be structured in a number of ways to suit your needs and to protect you from inflation. They can range from a simple yearly payment to complex arrangements consisting of an initial lump sum payment, monthly indexed installments, deferred payments, and special provisions relating to the future care or death of the insured.

Typically, the defendant would purchase an annuity (from an annuity or insurance company) for a dollar amount that is paid up front. The annuity provides regularly scheduled income payments as specified by you and your attorney under the terms of the structured settlement.

What are the advantages of a structured settlement? Well, for one thing, you are guaranteed a source in income for life. A second important advantage is tax management: you may be able to substantially reduce the taxes you would have to pay Uncle Sam on any investment income that would otherwise accrue from investment of a lump sum settlement.

Apart from the tax savings, it’s also important to "know thy self" when making a decision about structured settlements. Are you the kind of person who would head to Vegas, do a little world travel, buy lots of toys, and basically blow your money until you have nothing left of your million dollars in a year or two? If so, a structured settlement might be the way to go.

There are some negatives, however, that you need to be aware of. First, once you agree to it, you are stuck with the terms of the structured settlement. You cannot change it at some later date. Hence, it’s very important to be represented by a good attorney and tax advisor who will help negotiate structured settlement terms that meet your needs, such as protection from rising inflation. If you don’t expect to live very long, on the other hand, you may want a settlement that guarantees a minimum payment even if you die before the guarantee period expires. This can protect your family or beneficiaries from being left without financial resources.

Contrary to the suspicions of some uniformed plaintiffs, structured settlements are not intended to and do not (assuming you are represented by a decent lawyer) re-assess or change your award. They are simply a device to allow for payment of your judgment or settlement over time, or on an installment basis. They are flexible and can be structured to meet many needs and life circumstances.

People who receive structured settlement payments however may decide at some point during the life of the settlement that they need more money in the short term rather than periodic payments over time. In this case, some people opt for a structured settlement factoring transaction. With this type of transaction the structured settlement recipient can sell (or encumber) all or part of their future periodic payments for a present lump sum.

While a structured settlement is not appropriate for everyone, they can be very useful, depending on your needs. Your attorney can help you evaluate whether they are suitable for you. Some additional links with more information about structured settlements are included at the bottom of this page.

This article is intended to provide general information only, not legal advice. Please consult an attorney for advice in connection with structured settlements or any of the issues addressed in this article.

The Best Services in Structured Settlement Company

For some people, actually having to manage a large sum is worrying. Some simply worry that they will waste their money and would prefer a regular income based payment model for this season. It's a good choice. If a structured settlement is thrown into the mix then those considering it may well want to take expert advance to build the right kind of settlement in of course the right structured settlement company. This is especially important if the injury compensation is based on a case of long-term or severe disability or injury.

The costs involved with adapting a home and a lifestyle of the clients of the structured settlement company, for the example, can be extremely high. An independent structured insurance settlement specialist may be able to advice on the best options at this stage. Beside that, compensation claims that are managed by the SS company give a long-term option that the individual will be given regularly payments for a specific period of time. Depending on the country of residence, these payments may well also be tax free. It often possible to negotiate with the exact term of the insurance settlement company, for the example, an individual may be able to negotiate an upfront lump sum payment to start with followed by an annuity based payment structure thereafter.

Many people simply like the security that given by the structured settlement company. The following may be considered as benefits of a structured settlement for claimant and include, but are no limited to structured disposition that may provide up front settlement cash for immediate claimant needs. The payment annuities tax free unlike most proceeds from a lump sum from the ss company. Beside that, the other claimant, such as, structured agreement may provide guaranteed income. There is also settlements annuities that guaranteed by the ss company for the specified amount, duration and frequency of the payments. Compensation annuities also may provide beneficiary protection in the events of premature death of the claimant.

Structure settlements may include income tax and spendthrift requirements as well as benefits that given by the structured settlement company. This kind of company always provide their best services for their clients, because when the ss company have an order they have to give their best services or they will lose many of their clients, because they are entrusted. In some cases, they will give their professional adviser to solve their client's problem.

An Opinion on Structured Settlements

laims on personal injuries and liabilities was usually given as a large one time money in the past and this leaves the individual to decide how and what he is going to do with the money and how he is going to use it over the long period of time. So it is necessary for a person to work out on how to distribute the money for the overall period of time to handle his medical expenses and other expenses caused by injuries.

If you have heard of a Structured Settlement payment agreement then these are structured programs that allow you to pay a sum of money for a certain period of time on a continuous basis. The amount of money that has to be paid is predetermined and an agreement is made between the parties. This is very helpful to the person as he no longer has to take the entire burden of paying out more money every time he encounters a personal injury. This can be compared with that of the mortgage paid on a home but the main difference is that you are the one who is getting paid this time.

If this sounds complex then it can be explained in a relatively simpler manner by explaining individual words of this complex phrase. By the term "structure", we get to know that the payments are made regularly based on a schedule which is predetermined. "Settlement" means that the party has to settle the money which he has agreed to and the "payment" refers to the payment of money which is made to the victim and "plan" explains how it going to be paid.

These settlements are mostly decided by private parties and do not involve courts in this procedure. This is always better for the one who is accused for the harm and also the injured victim is also compensated. At the same time, the victim also has the option of taking the one defending to court in case they do not arrive at a solution or a settlement plan. In cases of court procedure, these settlement plans come as a court order and failing on this agreement would leave the person greater consequences to face as it would be against the law. This is main reason why the one affected always prefers to settle in court even if the defendant offers an attractive plan. This makes the defendant follow things compulsorily which also happens in the case of private structured settlements. The main difference is that it is highly enforced in the case of a court settlement.

The two parties involved must be in knowledge of the structure of the payment plan and this structure is mostly made in the favor the defendant. These payments are not charged for tax and they are tax free for the defendant and it can help him prevent loss of benefits which is not available in the case of large amount. Everything has to be properly understood and negotiated before making a settlement plan.

Debt Settlement - Learn the Meaning of Structured Settlements and Debt Relief

Credit card debt has been troubling most US citizens day in and day out. The recession has done massive damage to the credit card users. Credit cards have traditionally been used for credit on monthly basis. For people who live from one pay check to the other, credit card has been the means to survive during the month. At the end the bills used to be cleared using the salary. Because of the recession most people in US lost their only source of income. They are now running form pillar to post to make both ends meet.

They also need to look for debt relief and get rid of their debt.

Let us take a look at structured settlements. A structured settlement is a payment plan that is spread over a period of time. Let us take the example of Miss Linda (fictitious) who met with a car accident and has been awarded a settlement of $100,000 for a period of 10 years. What is means is Linda will be paid a total amount of $100,000 over a period of 10 years in monthly installments. Using this amount she will be able to meet her regular expenses over a period of 10 years. She may have an option of going in for one time compensation or a debt settlement.

A large number of companies are also into the business of buying structured settlements. If you have gone in for a structured settlement you can sell it to a company and get a lump sum amount. This amount can be utilized to clear your debts. In a manner these settlements and debt relief are closely related to each other.

If you are to go in for a structured debt settlement you will have to agree to clear your debt over a specific period of time and make regular monthly payments. In exchange you get an overall reduction in your debt.

Debt settlement is a viable alternative to filing bankruptcy. Most consumers are able to eliminate at least 60% of their unsecured debt while avoiding many of the negative consequences with filing bankruptcy. If you are over $10k in unsecured debt you will be eligible for debt settlement.

What is a Structured Settlement?

Structured settlements have long been part of the legal system - first introduced to both America and Canada in the 1970's they are regular practice for anyone who has won a sum of money. But just what is it?

It is a sum of money that has been won (usually as part of a legal claim, such as a claim for personal injury). Instead of receiving the entire amount in one lump sum, as had been traditional (and indeed the only method), by using a structured settlement the party receiving the money does so at regular intervals.

Such intervals are decided by the receiver of the money. It could be any length of time, but most common is monthly or annual instalments.

They will vary wildly from settlement to settlement. This is normal because there are so many different cases that call for monthly settlements. All sorts of circumstances have a bearing - from the needs of the person receiving the money to the finances of the person/company/institution paying it.

An important factor that needs to be considered when looking at a structured settlement is that of inflation. Obviously if the money is being paid over a large amount of time the payments, if they were to stay the same, would gradually become of less worth in 'real value'. This is something that needs to be addressed in the settlement.

They are legally binding. That is true of both sides, an important factor. If a structured settlement is decided on then you are not able to change it to get the remainder in a lump sum, even if you wanted to.

Why Have a Structured Settlement?

For many people it has a number of positives attached to it. It is important that you consider all sides of a structured settlement before deciding on it.

• Regular payments makes life easier. Whilst a lump sum is nice it is very easy to spend on nothing. A regular monthly payment allows them to spread out their largesse and take full advantage.

• It also helps give tax breaks. The smaller payments will attract less in tax payments than a lump sum would. This means that you will be able to get more of the money by having a structured settlement than you would by having a lump sum.

• For some who, such as those who have been seriously injured, regular monthly costs are incurred - such as health bills or rehabilitation. This settlement nicely meets those on a regular basis rather than eating into savings.

• If it is a person or small company that is having to pay the settlement then it could well be that they are unable to afford to make the full amount payment. That being the case they can arrange a structured settlement, or even have one forced on them by the courts.