All About Structured Settlements

Let us say you have a debt of $50, 000 and you have no idea how to pay for it because you are out of job. Because of this, the lender will file a court case against you for you to pay up. Instead of spending thousands of dollars and time in a court hearing, you can ask for out of court settlement where you can agree on paying your debt in a specific span of time. This process is called structured settlement.

How can you ever think of structured settlements when you have no idea what it is? This article will teach you what it is so when the time comes that you will get to encounter these words and you will get in trouble, you will no longer be clueless.

What is structured settlement?

This kind of arrangement is largely concerned with the amount of money paid to a person after a suit. It also includes the tax reductions and other necessary payments. If you happen to become a winning plaintiff in a lawsuit, you have to have received some kind of compensation from the defendant, organization or a person. This monetary compensation can be paid in installments or in a monthly basis with added interest.

This type of settlement is tailored for a person to pay up his obligation in a manner that he can never miss any payment period because the payment is low and is based on what he can afford. Of course, the settlement works for both parties. Each party has to give its consent to the arrangement. This way, it will always be win-win situation. The payer must also have a source income to be able to cope with the payments in a certain span of time.

Let us say you are the recipient of the settlement. It will be a great advantage for you considering that you have a source of income. What makes it more beneficial for you is that the taxes are reduced compared to limp settlement.

One of the disadvantages of structured settlements is the fact that once the settlement is agreed upon, you can no longer change the date of payments. However, if the payer wants to pay in lump sum right away, that can be allowed.

Furthermore, the settlement may possibly also take deferred payments or special provisions in case of death of payer and the payee.

Rogers is a freelance writer that specializes in a number of different financial topics like retirement planning and debt management. Check out http://www.sell-my-structured-settlement.com/ for more information.