Understanding Structured Settlements

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If you search online you will realize that you are repeatedly recommended to contact a personal injury lawyer after an accident. Too often people wouldn’t contact any lawyers because they think the extent of disaster and damage isn’t worthy of being taken to the lawyers. Some are afraid of the legal proceedings and the time cases take in the court without realizing the fact that most of the personal injury cases get resolved outside the courts. Why people are repeatedly told to contact the personal injury lawyers is because how a case seems is only the tip of the iceberg.

There are more factors involved in a case than a normal person might be able to think of. Just look at the matter of receiving the settlement. Even if you have successfully settled the case, and your defendant has agreed to give you the settlement amount, it doesn’t go that smooth and easy. The amount doesn’t get credited into your account directly. The amount reaches your lawyer in order to ensure he receives his fees before the money is put into your account. That too happens only when you have chosen a lawyer with contingency fee plan.

The Structured Settlement

If your lawyer has successfully managed to win the settlement for you, the amount will be given to you in one out of two ways. You can either receive the full amount as lump sum payment or receive regular payments from the insurance company of the defendant. This serves as a steady stream of income for you that continues for many years until the full settlement amount has been paid. This is structured settlement but it doesn’t always suit every situation. What if you as the victim are in need of money on urgent basis and scheduled payout isn’t the right option for you?

The Solution

The solution to this problem is to exchange this payment plan for settlement amount. What you do is you exchange this plan for a lump sum amount. However, there has to be a buyer of the payment plan who agrees to give you the lump sum amount in exchange of your plan. This particular person will be the third party in this case. While it may seem that finding such a person would be impossible, in reality it is not. Some people are always more interested in getting a timely income spanning over a long duration rather than lump amounts.

However, what you need to understand here is that the buyer of the plan will not provide you such big service for nothing. The lump sum amount that the buyer pays to you will be a bit less than your total amount. The difference isn’t big and you are always in the position to decide otherwise if you don’t like the offer. Since you need the money on urgent basis there are higher chances that you will accept the lump sum amount. The transaction takes place under the effect of certain laws and these laws are different in every state.

What You Will Need To Do

In order for this transaction to take place you have to go through a complete process. You as seller of the plan have to disclose insurance company’s name, total settlement amount and a detailed outline of the plan to the buyer. Now, the third party takes a decision on your provided information. Once the buyer agrees you have to provide further documents on the settlement to him. A contract is then signed and submitted to legal approval court. The court will take its time and provide approval for the contract.

The Presence Of Personal Injury Lawyer

The whole process sounds easy but it is important that you keep your lawyer by your side while going through this process. The lawyer decides whether the amount being provided to you is the right amount or not. The complexity of laws pertaining to structured settlements makes it necessary for the involved parties to get in touch with the right law firm. You have to perform a thorough assessment of your needs for a lump sum amount. It is about comparing the importance of lump sum amount today to the need of a steady income in the coming time.

About Author


Ehline Michael
Michael Ehline is a prolific blogger on California and international tort law. He has been a guest on CNN, discussed in major news publications like Forbes, Circle of Legal Trust, Personal Injury Warriors, and International Cruise Victims. He has lobbied congress on behalf of injured consumers, served as a United States Marine, and won millions of dollars for his clients. This blog discusses Ehline's insights and musings on all aspects of negligence law as it relates to all things "accidents." Ehline can be reached at (213) 596-9642.