Structured settlements are legal settlements where a defendent pays a specified settlement amount to a plaintiff in installments over time.
For instance, if you win a $50,000 settlement, you may receive $1,000 a month for 50 months or $1,000 a year for 50 years, depending on the terms of your structured settlement.
Structured settlement payments can also result from other annuities of various types. Instead of receiving a settlement over the course of many months or years, many people prefer one lump sum which can then be spent or invested immediately.
Sometimes, a recipient of a structured settlement will seek out a buyer to purchase all or a portion of their payments.
A structured settlement company, sometimes called a factoring company, then pays the consumer a discounted lump sum in exchange.
This system can benefit the consumer by allowing access to money up front, and can also benefit the company that purchases the settlement at a discount. Because some predatory companies take advantage of less knowledgeable consumers, it is important to know what to look for when choosing a settlement company.