It is possible to receive a structured settlement loan in almost all regions of the United States. People enter into structured settlements to receive compensation from individuals or companies after sustaining personal injuries. The compensation is paid over a set period of time and in small installments. These installments, which are mostly given as part of a life insurance agreement, can be used as collateral for loans. There is a simple procedure of applying for loans while relying on annuity payments.
Prerequisites
If you are interested in applying for a structured settlement loan then it is necessary that you first dissect the type of settlement you have. It is a common mistake to apply for loans when your settlement agreement clearly advises against that. Some agreements come with strict clauses regarding loan disbursal and other financial leverages taken out while using the document as collateral. If no such regulations are present then you will be eligible for the loan. Court permission will still be required if the settlement was reached under its decision. You will also need the permission of the insurer and the defendants if you reached an out of court settlement for your injury lawsuit.
You can start the loan application process once you have ensured that there are no snags or legal restrictions.
Application
A bank or financial institution will accept your application for structured settlement loan after thoroughly scrutinizing and evaluating the documents. Processing can take up to 90 days and up to 120 days in some exceptional cases. Selling your annuity on the other hand will not take much time as you will be able to receive the money within 45 days. Fees are to be paid once the application is processed and loan is granted. This fee is coupled with other charges and some jurisdictions also deduct income tax from the lump sum loan amount. You can use the rest of the loan as per your discretion while paying it back with your annuity payments.
Comparison with settlement sales
It is a good idea to compare the sale of settlement agreements with the disbursal of a structured settlement loan. If you are to sell an annuity then you will pay more fees with possible deduction of taxes. This will effectively cease the settlement agreement with no chances of you receiving payments in the future. If you are taking a loan on a structured settlement then your original plan will remain intact but you will have to pay back the loan with these payments.
Annuity buyers often purchase only 50% of settlements but loans are pervasive on almost 100% of the payment plan. This offers a greater leverage to people taking out loans as they will be able to spend it on a number of options, including the purchase of property. It is often necessary to hire a third-party or an accountant to sort out the details of a structured settlement loan. This also removes any chances of troubled clauses being added to the agreement and prevents other complications.
