Structured Settlements 101: What Are They?
In 2019 alone, people filed more than 286,289 civil lawsuits in U.S. courts. Though many of those cases ended up settling out of court, most get settled with some kind of financial agreement.
The most common of these financial agreements is the structured settlement.
If you’ve never considered how people get the money they need after filing and winning a lawsuit, you’re likely not sure how structured settlements work in the first place. Here’s what you need to know so you can make the best decisions for your financial needs.
What Are Structured Settlements?
When you’re injured in an accident, whether it’s a car accident or an accident at a business, you have the option to take the responsible party to court. The point of going to court is to get a financial settlement to help cover the cost of your medical bills and to compensate you for any undue pain and suffering you experience.
If you win your case, the court will award you with a settlement amount. If the amount of the award is small, you can take it as a lump-sum or one-time payment.
However, if the amount you’re awarded is large, the payments may get broken up into smaller portions. This type of payment plan is a structured settlement.
How Structured Settlements Work
Once you’re awarded a structured settlement, the party responsible for your injuries will continue to send you payments at a specified time for a set number of years. They’ll do this until they pay the full amount of the settlement that you won in the lawsuit.
Depending on the defendant’s situation, they may make payments directly or choose to settle their obligations to you with an annuity.
Insurance companies host these annuities and make payments on the defendant’s behalf until the settlement gets paid in full. All you have to do is accept the payments and use them however you see fit.
Is There a Way Out of Structured Settlements?
Structured settlements work by helping you get the full amount of money you’re owed from the party responsible for your injuries. They’re designed to give you reliable payments each month.
If you need access to the cash tied up in a structured settlement, there are companies that will give you cash in exchange for the settlement. If you go this route, know that you will have to pay for the service. Compare your options and choose the company that offers you the best deal.
Structured Settlements Are Financial Agreements
Structured settlements are basic financial agreements made between two parties. The agreements ensure that you get the compensation you deserve. Now that you know how they work, you’re ready to negotiate the best deal for yourself and your financial situation.
Keep in mind that understanding how structured settlements work is only one part of speeding up your recovery. Check out our latest posts to learn more about the legal process so you can navigate your court case with confidence.