subject: A structured settlement factoring transaction [print this page] In case you have received a personal injury due to another person's fault and you have filed for damages in the court, you will have two options for receiving the claims settlement amount; in periodic installments or in a lump sum. People who opt for a structured settlement receive their claims payments in installments rather than in lump sum.
Structured settlements are beneficial for the plaintiff since they are generally tax-free as compared to receiving money in lump sum. Although structured settlement payments are highly beneficial, the court has ruled that in order to continue with the tax breaks, the periodic payments cannot be converted into lump sum payment.
A structured settlement factoring transaction implies selling the settlement at a discounted price. Such a transaction is beneficial since it ensures availability of cash when it is needed the most. The need for immediate cash might arise due to various situations such as for purchasing a new house, purchasing a new vehicle or paying for the children;s education expenses.
A structured settlement factoring transaction would involve the court determining the best interests of the person who is selling the agreement. The concept of best interest is generally not defined and is determined on a case to case basis. A judgment based on the best interests of the sellers will ensure that they are able to take maximum advantage of the opportunity of selling their structured settlement.
