How to get Cash in Advance on a Structured Settlement

A sale of a structured settlement involves the assignment of future payment rights from the person receiving the payments (known as the payee, annuitant or structured settlement recipient), and a third party. The process of selling a settlement of this nature is governed by not only Federal law but also governed by the state where the annuitant resides. While state laws differ slightly, many of the individual laws have common elements. These elements include a disclosure period, a court filing, a notice provision and the assignment for a lump can only be consummated by the entry of a court order.

cash for a structured settlement

The court that hears a transaction that proposes to convert a future structured settlement or portion thereof to a lump sum must assess whether said transaction is in the best interest of not only the payee but the payee’s dependents. As you might expect, this can be a very factually intensive discussion with each judge exercising his or her judicial discretion to determine whether permitting the transaction is in the structured settlement recipient’s best interest. From California to Maine the courts throughout our country are presented with petitions relating to the assignment of structured settlements on a daily basis.

By the nature of it being a court proceeding as well as the fact that state law, in general, requires 20 days’ notice of the hearing to any interested parties, the process can take some time. It is fair to assume that between the day that a petition related to the assignment of a structured settlement is filed and the day the case comes before a judicial officer, it could be as little as a month and as much as 2 to 3 months (in some areas). In other words, if you need “cash now” and your goal is to satisfy this need by the conversion of a structured settlement annuity to a lump sum, you should expect the lump sum of cash not to come over night and appear in your bank account.

Many people looking to get a lump sum of cash for a structured settlement fail to recognize the process takes such a long time. Whether you are looking to buy a house, stop foreclosure, purchase a vehicle or pay off debt, you need to recognize the timeframe involved and not wait to the very last minute thinking the money will hit your account tomorrow. With that said, it is also critical that you not move forward in a haste fashion and not consider better options for raising the capital you need.

Not rushing to sell a structured settlement also means that if you have determined that doing so is, in fact, in your best interest, that you consider talking to more than one structured settlement buyer and evaluating not only what they can offer you as a lump sum but also what is the best way, based on your specific needs to format a structured settlement buyout. Keep in mind even if you decide to raise money through the assignment of your structured settlement it very well might not mean that you should or have to sell all of it, or even the immediate payments that you are currently relying on for you day to day. It is also important for you to budget for NOT receiving the structured settlement because once you sell it and get your lump sum, you will not get the payments back—rarely on structured settlement transactions for lump sum designed a repayable loan with the structured settlement utilized as collateral.

One of the aspects that folks often inquire about is the availability of a “cash advance” as part of a structured settlement sale. The reason this feature is often of critical import to individuals is that their current situation can be aided by receiving some amount of money today even if they will not receive the full lump sum if and until a court enters an order approving the assignment as in his or her best interest. Cash advances may be available from the structured settlement buyer you elect to work with but it is important you inquire about this when you are asking about the services that structured settlement buyer offers.

How much of an advance on your lump sum buyout can you receive? What is the process to get that? The answer depends on a host of factors including but limited to the state where you live. It cannot be stressed enough that while a cash advance may be an important aspect of the transaction to you, it is critical that you evaluate the transaction itself- whether liquidating part or all of your structured settlement- is in your best interest. While you are in the best position in most cases to assess what will improve your life it is never a bad idea to pause and contemplate all options before you make any decisions

What is a Structured Settlement? Can I Get a Cash Advance on a Structured Settlement?

There is a lot of confusion about what is a structured settlement. Many people will search the internet trying to figure out if they should accept one, what are the benefits and drawback and if they have one what is the process to liquidate if the time comes and they need a lump sum of cash. At the outset it is important to briefly explain that a structured settlement, in a very general sense, relates to the settlement of a lawsuit whereby the injured party (often referred to as a plaintiff) accepts payments overtime to compensate for his or her injury instead of all the money upfront. By virtue of the fact that a “structured settlement” is in fact a “settlement”, the plaintiff and defendant must come to an agreement that the lawsuit, claim or demand be settled in this fashion.

cash for structured settlement

It is also important to recognize that when one is talking about a structured settlement, they are merely referring to fact that a resolution of some claim occurred that resulted in periodic payments overtime. A settlement structured in this fashion can result from claims or cases ranging from serious personal injury to workers’ compensation to employment disputes and more. While the structures of settlements of these types of cases may all look the same, the legal, tax and financial implications differ depending on what the basis of the underlying claim that gave rise to the structured settlement was. The most significant differences for some people may be the future potential assignabillty of a structured settlement if need comes about in the future where the recipient wants to “cash out” the settlement and get all the money (or part of it) upfront.

It is critical to understand that much of the law in this area is governed by specific state code provisions. What you might be entitled to do in Connecticut if you live there, may differ than what a California structured settlement recipient has the right to do. It can be a difficult task to ascertain what your options are. For example, you may live in a state that allows (what is often called) a commutation provision or process in the event you received a structured settlement from a workman’s compensation case or you may live in a state that allows you to assign your right to worker’s compensation to a 3rd party buyer. In particular, the assignment or liquidation of worker’s compensation is very much controlled by the state where the claim was resolved.

Somewhat differently, if you have a structured settlement from a personal injury lawsuit, there is a specific Code provision that governs when and how you can liquidate some or all of the structured settlement and that Code provision works in tandem with, in most cases, a state law in the state where you currently reside (not necessarily where the case was settled). The Federal and State law in this area of assignment of structured settlements require that a hearing is held in a civil court and that the court find, among other things, that the assignment of your structured settlement payment is in your best interests. While unlike, in most cases, with worker’s compensation payments, you do potentially have the right to petition a court to allow you to liquidate structured settlement payments from a personal injury lawsuit.

This brings to the natural question of whether you can get a cash advance on a structured settlement. As noted earlier, the answer is very specific to the state where a workers compensation case was settled. With respect to personal injury structured settlements, one must be clear what they are referring to as a structured settlement cash advance. As we discussed, getting a lump for a structured settlement is generally permitted if the court in the state where you live approves the transaction as in your best interest. This process however can take between 1 to 2 months and often times the need for an immediate cash advance exists. When this is the case, some structured settlement buyers (subject to state law again) may release a portion of the lump sum that they have agreed to pay if and when a judge approves the transaction in your home state. This process and the ability of a cash advance on your lump sum is something you should address with the 3rd party making an offer to buy your structured settlement before you sign any documents. 

Like many areas of the law, a structured settlement is heavily controlled by state provisions and the actual documents themselves. Before pursuing any liquidation options you should consider alternatives and potentially meet with a legal advisor to discuss the implications of the transactions. While there are countless justifiable reasons why cash now can benefit any of us, there are often good reasons why converting future payments rights to a lump sum may not be prudent.

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