If you win a court case, settle a court case, or win a contest, you may find yourself in a position where a person or a company owes you a large sum of money. That’s great! But, unfortunately, things don’t always stay that simple. In some cases, you may end up with what is called a “structured settlement.” While structured settlements can, in certain specific situations, be best for both parties, they also come with some very serious drawbacks. If you’re being paid through a structured settlement, you may find that the money you need isn’t around when you need it — despite the fact that you deserve that money. If this sounds like your situation, here’s what you need to know about structured settlements and about getting the money you deserve when you actually need it.
What is a structured settlement?
First things first: what is a structured settlement, anyway?
In a structured settlement, two parties agree (“settle”) on a plan to pay out the money you’re owed over a period of time. Rather than receive a big lump-sum of cash, you’ll receive your payments in installments. It’s as if the person or company paying you is paying back a loan (which, in a way, they are — they’ve “borrowed” time, or the money they owed, and are now paying it back).
Structured settlements can be necessary in some cases. If the person or company who owes you the money simply can’t pay it to you up front, there’s not much that you can do to get that money other than to figure out a way for them to afford it — even if it takes longer than you’d hope. And, in certain cases, structured settlements can be good for the party receiving the money. For instance, there may be tax advantages to getting the money bit by bit year after year, rather than all at once (if paid all at once, the windfall might incur a higher tax rate).
But there are also obvious and severe problems with structured settlements from the perspective of the party that is receiving the money. Some court settlements aren’t taxed at all, erasing that potential advantage; and, worse yet, a structured settlement can keep the party who is owed from getting the money when they need it, setting off a chain of more serious problems.
When structured settlements aren’t right for you
A legal award, legal settlement, or contest prize can be a huge help. Legal awards can be necessary for people trying to make themselves whole again after an accident or another costly disaster. Contest prizes can be a way out for people with financial problems. But these things can only help if you actually get your money — and structured settlements can interfere with that.
Simply put, structured settlements can draw out the process of you getting paid. That can be a disaster when you need money to pay off immediate debts. When you can’t make ends meet, your financial problems can compound and lead to a cycle of debt, bad credit, and other long-term disasters.
Tax advantages of structured settlements might be nice to folks looking for the cherry on top of an already great financial situation, but that’s just not the case for many of us. Many Americans have more immediate and pressing financial situations to think about, and in their cases, it’s often better to get the money sooner, where it can work to pay off debts and set up a stable financial future.
Fortunately, there are things that you can do to get your money sooner.
Getting cash from a structured settlement
A structured settlement is an agreement between the two parties. Going back to the party who owes you is rarely an option — they’ll have little incentive to re-work the agreement.
But structured settlements have value. What if you could sell yours, or take out a loan based on it?
In fact, in essence, you can do just that. The experts at Settlement Giant assure us that there are companies that offer lump-sum payments in exchange for future structured settlement payments. These companies can be reliable ways to get the cash you need when you actually need it.
Making the right financial decision for you
Depending on your specific financial situation, swapping your long-term structured settlement payments for a lump-sum payment might be the best solution for you. Money in your hands right now can be used to do things like escape the cycle of debt, which is incredibly important and ha long-term consequences that far outweigh other considerations.
For advice on your particular situation, you’ll want to speak to an expert. Financial advisors can help you understand how to weigh your options regarding your structured settlement.
If your structured settlement isn’t working for you, consider your options. There are ways to unlock the value trapped in your structured settlement and make your financial situation better in the near-term. Good luck!