Structured settlement loans are given against plaintiffs’ periodic claim settlements. Court judgments where a structured settlement is awarded are called periodic payment judgments. If a claimant has been awarded a financial resolution in which he or she will receive periodic payments instead of a lump sum, a loan may be extended against the value of the settlement.
Such loans are offered by many financial organizations specializing in legal funding. The practice is not held in very high esteem, since the laws concerning structured settlements are designed to protect the recipient from exploitation. However, the fact remains that funds received through a structured settlement represent a form of income, and loans against any sort of regular income are always available.
Availing of such a loan is often the only recourse open to a claimant for obtaining a substantial amount of money. A structured settlement is treated as a special income tax category and cannot be traded in for a lump sum settlement.
The laws surrounding structured settlements are rather specific, and obtaining a loan against them is not as easy as it may sound. Financiers who claim otherwise are usually not reliable. In legal terms, using a structured settlement as collateral for anything at all, including a loan of any kind may void the whole deal. Availing of such a loan is a matter best left to a knowledgeable attorney or law-savvy accountant.
In cases where loans are taken against a structured settlement, the purpose is usually not to obtain hard cash but to buy a house or some other asset. In such cases, the money coming from the settlement may be used to pay regular installments and would not represent a loan in the classic sense of the word.
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