important cash for structured settlements facts factoringbusinesssite com
By Richard Panyan
What's involved when you sell a structured settlement?
If you need to get cash cash for structured settlements, there are some important matters that you should be concerned with. The long term cost of selling your structured settlements for a lump sum payout are substantial. Most people don't take these fees into consideration and only focus on the immediate impact of a large cash windfall.
If you finally do decide to go with a structured settlement brokerage company this what you need to know about the law.
If you're in a lawsuit,some services "offer" you the ability to "sell" your structured settlements to them. In exchange, they provide you with a lump sum of cash in the event you need this type of financial resource.
There are laws that protect the consumer from unscrupulous brokerage companies. Many times, the settlement agreement contains a nonassignability clause which is basically unenforceable.
Some of the purchase agreements require the consumer to stipulate to a host of provisions which severely restricts consumers rights and raises questions as to their basic fairness. To forestall suit, however, the contracts often require the consumer to defend and hold harmless the purchasing party in any lawsuit.
One of the largest brokers of structured settlement has said that more than 50% of structured settlement agreements have premiums that are less than ,000. Less than 13% have settlements that are valued at greater than 0,000. Whatever the original concept of structured settlements was, and whatever the purpose of the tax rules that facilitate them, these figures clearly show that structured settlement today are not used principally for catastrophic injury resolution.
With structured settlements that qualifies for preferential tax treatment, the claimant does not have the right to delay, accelerate, decrease or increase the future payments he or she receives from the structured settlement company. If the claimant's circumstances change, such that they need additional funds from the settlement, the only means by which the claimant can have access to these funds is to sell either a portion or all of the settlement.
According to industry watchdogs, the unscrupulous side of the structured settlement factoring business is rapidly growing. One company announced that it has undertaken more than 7,700 structured settlement purchase transactions with a total value of 0 million. During the first nine months of 1997, the same company undertook more than 3,700 structured settlement purchases paying million for 3 million of structured settlement payments.
What that means is that the long-term financial security and careful planning so painstakingly set up to take care of the needs of the injured victim and his or her family are being tossed aside. This is all because factoring companies offer quick cash at deep discounts for future structured settlement payments ¡ª but at what cost? Once these victims have given away their only source of assured future financial income, they may indeed have to go on public assistance to cover future basic living expenses and medical expenses ¡ª even though this is what the structured settlement plan was set up to avoid.
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