What is a Structured Settlement & How Do They Work? - DRB Capital
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What is a Structured Settlement & How Do They Work?

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Understanding What is a Structured Settlement?

If you were awarded a structured settlement, you may have questions about how they work. You may have heard the term “structured settlement” and have asked yourself, “what is a structured settlement?” Perhaps you already know the basics of structured settlements, especially if you have already been receiving payments for quite some time now, and you’re considering selling future payments for a lump sum of cash. If you’re thinking about selling structured settlement payments for a lump sum payment, learning more about how structured settlements work can be helpful during the process.

Personal Injury Lawsuit Settlements

personal injury lawsuit settlementStructured settlements can stem from different types of lawsuits, but they often come from personal injury lawsuits. This can include a wide range of specific lawsuits, such as car accident lawsuits, product liability lawsuits, slip and fall lawsuits, medical malpractice and so on. Whenever someone is harmed due to the negligence of another, it may be the basis for a lawsuit. Typical award amounts will vary widely, but they are usually based on numerous factors, such as the extent of the injury, the number of medical bills incurred, loss of quality of life, etc. When awards are substantial, they are often awarded to the plaintiff in the form of a structured settlement.

Lump Sum vs. Structured Settlements

You may have also heard the phrase “lump sum” often as well. Understanding lump sum payments can also be helpful if you’re asking yourself, “what is a structured settlement?” A lump sum payment involves a single, one-time payment to the recipient. You’ll often hear about lump sum payments when it comes to lawsuits and lottery winnings. When it comes to the lottery, winners often have the choice of receiving their prize money upfront in one payment. Alternatively, winners can choose to have their prize money distributed in smaller, periodic payments until their winnings are completely paid out, which often is set up for a number of years.

awarded structured settlementStructured settlements and personal injury lawsuits work somewhat similarly. Plaintiffs might receive their settlement money in the form of a one-time lump sum. Other times, however, they may be awarded a structured settlement. This means their settlement amount will be distributed in periodic payments until the settlement is fully paid out. The payments may arrive monthly, quarterly, or even annually, and they are also usually designed to last many years.

Selling Structured Settlement Payments for a Lump Sum of Cash

If you are receiving structured settlement payments, you typically aren’t tied to receiving your money in the form of periodic payments indefinitely. If you decide at any point that you want more of your money upfront in the form of a lump sum, you will usually have the option at any point to sell some, or all, of your remaining payments for a lump sum payment. In order to sell future payments for a lump sum of cash, you’ll work with a company that specifically handles these types of transactions. These are often referred to as structured settlement payment buyers, structured settlement companies, or factoring companies. The company you ultimately decide to work with will technically purchase your payments, and in return, will provide you with money in one lump sum. The amount of money you receive for the sale of your remaining payments is based on numerous factors, such as how many payments you choose to sell, the value of your payments, and other factors.

selling structured settlement paymentsIf you choose to sell all of your structured settlement payments, you will no longer receive any payments once the transaction is finalized. If you decide to sell just a portion of your payments, you will receive a payment based on the amount you decide to sell, and then you also still receive structured settlement payments. As a result of receiving some of your money in a lump sum payment, your structured settlement will either not be as long as it initially would have, or payments will be less. These numbers will vary considerably based on your individual structured settlement and the number of payments you choose to sell.

Contact DRB Capital Today

If you still have questions about how the process works and how to sell future payments for a lump sum of cash, contact DRB Capital today at 877-894-4541. We are happy to help and provide you with more information, as well as provide you with a completely free quote for the sale of your future payments.