Pros and Cons of Selling Structured Settlement Loans
When injured parties win compensation in a lawsuit, the money is often disbursed in small, frequent payments known as structured settlements. They can prove useful to plaintiffs who want a regular source of income, especially if an injury has left them unable to work.
Structured settlements are usually established in the form of an annuity policy, set up by the defendant’s liability insurer. Annuity policies can be complex, and include certain costs to the plaintiff, but they have many benefits.
One advantage is the fact that annuity funds are managed by financial specialists, which safeguards against the risk of unwise decisions being made by someone who suddenly comes into a lump sum. They can be tailored to suit the specific needs of the plaintiff, and even combined with a lump sum to cover back debts, or any other immediate expenses.
Perhaps the main advantage of structured settlements is the possibility for mitigating against future events. Annuity policies can be written to take into account future changes in medicine that could help the injured person, or any other foreseeable events that may require a change to the amount paid out.
The problem is, life is unpredictable. What if something not covered by the settlement payment plan crops up and you need a bigger sum of money at your disposal? In such cases, LawStreet Capital can buy your settlement – or part of it – and give you a lump sum, or reorganize the payment schedule according to your requirements. Known as structured settlement loans, this financial arrangement has its pros and cons – both of which we’ll explain.
Benefits of selling structured settlements
There are all sorts of financial demands that can make a lump sum preferable, such as:
- A deposit for a new house
- Paying off a mortgage
- Settling large medical bills
- Sudden loss of income
Another benefit of structured settlement loans is the potential for investment. If you buy real estate to rent it out, you could end up generating a regular income that exceeds the monthly payments, plus you have equity in the property itself.
Sometimes, annuities are inherited when the policy-holder dies. The beneficiary may prefer a lump sum, as they are unlikely to have the same circumstances as their relative/benefactor.
Disadvantages of selling structured settlements
The main argument against selling structured settlements – at least in their entirety – is the potential for misspending the money. If you are bad at managing your finances, it’s sensible to think carefully before opting for a lump sum. Don’t sell because of a mere change of heart, or because you want to live the high life for a while. If you don’t have plans to reinvest, you should only sell a structured settlement if you have another source of income, or are very careful with money.
Learn more about lawsuit loans
Unlike bank loans, which come with high interest rates and fees, structured settlement loans aren’t really loans at all – it was your money to begin with, so you aren’t borrowing it from anyone. LawStreet Capital offers some of the industry’s most competitive rates and never requires credit checks or employment verification. To learn more about our lawsuit loans and structured settlement options, please call us toll-free at 1-866-FUND-662.