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Receiving Adequate Cash from Structured Settlements

May 2, 2008
When a court orders a large settlement to be paid, at the time when the lawsuit is resolved, there is an agreement amongst the parties for an amount to be paid in monthly instalments. The rationale behind this is to make the payments manageable should the payee be awarded millions.

If the payee is expecting to be paid all at once, they will be upset to find out that the settlement which the court has awarded them must be paid in monthly instalments. For this reason, third party companies may offer the payee a lump sum payment in exchange for their monthly instalments.

Having a third party intervene is beneficial to all. The payee receives his or her lump sum payment as originally requested and the payer continues to send the monthly instalments. The third party company is then the recipient of the monthly check and not the original payee.

This system offers the payee a lot more freedom to do as he/she pleases with the winnings, since a large sum of money is meted out to him. At the same time, it does not put the burden of a large cash outflow on the payer, which is usually an insurance company paying damages as agreed.

Now the payee has many options to choose from on how to spend the money. He/she could think about making an investment such as property or fulfill his/her dream or anyone else's as well. His/her lifestyle could change dramatically which he/she would not have even considered if he/she were to get a monthly instalment from the structured settlement.

The third party companies truly benefit from this type of financial arrangement. When the company makes a lump sum payment in lieu of the structured monthly instalment, it guarantees a steady flow of money into their portfolio. The third party company then makes an investment and it is paid with the monthly checks. Therefore, the cash flow is never interrupted and their financial investment will be sure to flourish. Many financial institutions seek these types of agreements.

Those individuals who receive the monthly payments from a structured settlement usually will see advertisements from third party companies. Before you commit to any agreement, you need to research and analyze what is the best option for you based on your current situation and the kind of settlement you have been awarded.

At the time when it is confirmed that you will be receiving monthly instalments and you would rather have one lump sum payment, then a third party company might be right for your situation. Consulting with a financial professional or an attorney would also be beneficial.
About the Author
Want to know more about structured settlements? Check out www.allaboutstructuredsettlements.com and find out if structured settlements are taxable and other related information.
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