Do You Need Your Structured Settlement Money Now?
Structured settlements are a great way to get a steady stream of cash payments over a long period of time. But they also come with a few drawbacks.
These drawbacks can be especially problematic if you face a large expense that your structured settlement cannot cover. Examples include urgent home repairs or uninsured medical bills.
No Credit Card Cash Advances
If you’ve been injured in a car accident, suffered medical malpractice or been involved in a wrongful death case, you’ve probably received a structured settlement. These payments are meant to provide you with a stream of income. However, it’s possible that your payout isn’t enough to cover your basic expenses and you need a big chunk of cash now.
If so, you might have seen ads for a structured settlement loan or for some form of pre-settlement funding. These are not loans but are instead a way for you to sell all or part of your future structured settlement payment stream to a buyer who then advances you the money before the sale is approved.
The structure of the transaction varies by company, but it usually includes an upfront sum to surrender your payment stream along with a discount rate to make up for the loss of future payments. The actual size of the advance will depend on a variety of factors, including the size of your payments, their frequency and length.
The best part of this process is that you’ll never have to worry about paying interest or fees. The cash advance can be used to pay for your living expenses, buy a home, or even start a business. It’s also a great way to get out from under a mountain of debt or cover a costly medical bill. As with all forms of financing, the decision to take out a structured settlement loan should only be made after you’ve explored all your options. If you have any questions, talk to a professional about the benefits of selling your structured settlement payment stream for cash now.
No Bank Loans
After receiving a settlement award from an accident or other lawsuit, you may find yourself in need of a lump sum of cash. While your structured settlement may provide you with a steady stream of income over time, it may not cover all your expenses at once.
If you need cash quickly, there are a few ways to get the money you need without having to take out new loans or use credit cards. One option is to sell part of your future payments to a company that buys them at a discounted rate and gives you a lump sum of cash right now.
These companies are called factoring companies. They’re actually buying your future payments from a company that distributes them to you in a structured settlement.
Unfortunately, some companies inaccurately call these transactions “structured settlement loans.” They’re not.
While a few banks will accept your structured settlement as collateral for a loan, most of them won’t. This is because a bank wants to be sure that it can seize your structured settlement payments in the event of a default.
This is why the law that gives structured settlement payments tax-free status also prevents you from using them as collateral on a loan. In addition, there are several other legal hurdles to getting a bank to accept your structured settlement as collateral for a mortgage.
You can try to convince a bank or other lender to approve your loan by showing them that you have a steady source of income, such as the monthly structured settlement payments. This will help you qualify for a loan, as the bank will be able to see that you’ll be able to make your loan payments on time.
If you have good credit, you can often obtain a personal loan from a bank or other lender at an interest rate of 6 percent or less. This can be an excellent way to pay for home improvements, for example.
Alternatively, you can sell your structured settlement payments to a factoring company and get a lump sum of cash. However, remember that this can be a risky decision and you should only do it if you have a clear plan for how you’ll use the money. You should check with your tax advisor and your attorney to determine how getting a lump sum will affect your taxes and public benefits, such as Medicare or Medicaid.
No Taxes
A large lump sum of cash is very enticing to people who have been awarded settlements for a personal injury case. However, some plaintiffs are unable to manage their funds well and spend the money on questionable investments or buy expensive luxuries that they may never need.
Luckily, structured settlements allow plaintiffs to receive the full amount of their awards over a long period of time and protect them from spending all of their hard-earned money at once. In addition, these payments are not taxed, unlike lump sums.
The Periodic Payment Settlement Act of 1982 changed the rules of US tax law to eliminate taxes on the entire amount of a structured settlement. The IRS now views the money as restorative, not income, and is therefore tax-free.
As a result, a structured settlement has become a very popular option for injured people who are receiving large amounts of compensation. It allows them to receive a steady stream of money over a period of time without having to worry about how it is invested, how much it will grow, or if the company that issued the annuity will be able to pay the settlement out in the future.
In addition to these benefits, structured settlements are also more secure than a lump sum. Rather than have the recipient risk losing his or her entire settlement if the annuity company fails to pay, these payments are guaranteed by the insurance company that is issuing the annuity.
Another benefit of structured settlements is that they do not fluctuate with market conditions like stocks and bonds. This is important because it prevents the injured person from making bad financial decisions.
In some cases, a recipient of structured settlements might need to access the money quickly in order to fund a new business or buy necessary equipment. This can cause the recipient to look to a factoring company for help. A factoring company purchases the accounts receivable (customer invoices) of a company and advances 70% to 90% of the total amount. This is a more costly form of financing, but it can be a helpful solution for companies that need additional cash flow.
No Waiting
A structured settlement is a series of regular payments made to a plaintiff who has won a lawsuit. A structured settlement is a better option than a lump sum payment in many cases, especially for tax reasons.
However, even if you do have a structured settlement, it may not be enough to meet your financial needs right now. You might be struggling to pay your bills or you might need a quick cash advance to cover unexpected expenses.
Luckily, there are several affordable options for getting money when you need it most. One option is to sell a portion of your future structured settlement payments in exchange for cash now. This is often referred to as a structured settlement loan.
Another form of financing that doesn’t involve a waiting period is factoring. Factoring is a type of business financing whereby you sell your accounts receivable (your unpaid invoices) to a factoring company that then advances 70% to 90% of the value.
In most cases, factoring is a good choice for small businesses, as it is easy to qualify for and allows you to quickly get an immediate influx of cash. Additionally, it is a more flexible form of financing than asset-based lending or bank loans.
It is also more cost-effective than borrowing from a personal loan, or using high interest rate credit cards. In addition, it can be used to retire debt or put into investments that offer a higher return.
Finally, it can help you keep your financial obligations under control and prevent you from spending the money on luxuries or questionable investments. This is especially important for those with little experience managing large amounts of money, and for anyone who might have a tendency to spend money on questionable or unnecessary purchases.
Selling your structured settlement to a buyer is a good idea if you need to get cash now, and there are reputable companies that specialize in providing this service. These companies will review your settlement fund, the amount of your future payments and your current financial needs and provide a quote that can be used to cash out today.
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