A Useful Guide to the Structured Settlement Loan Process
If you’re living in the U.S., it’s more than likely that you’re eligible to receive a structured settlement loan. Most individuals enter into a structured settlement to get compensation from a company or another person after a lawsuit. The payout structure is done over a set period, and usually in equal installments. Installments are set up as either a life insurance agreement or can be used as collateral. The process of applying for a structured settlement loan is simple and quick.
There are a few prerequisites that must be met before you apply. First things first, you need to know what type of structured settlement you have. One thing you must avoid is applying for a loan when there is a clause that says you are not permitted to take out loans or financial leverages to use the document as collateral. If there aren’t any restrictions, then you are eligible to apply for a loan. If the settlement has been reached, you still may need permission of court. also, you might need the defendants and insurer’s permission if the settlement was reached outside of court. After you’ve done your due diligence, and you’re certain there are no restrictions, you can then begin the loan application process immediately.
Next, either the bank or financial institution will evaluate your documents before it can accept your loan application. The processing length can take up to 120 days in some cases. You also might want to consider the option to sell your annuities. Selling your annuities, will make it possible for you to receive the money in 6 weeks or less. After your loan has been processed and granted approval, you will be responsible for paying fees. The fee and other charges will deduct income tax from the total loan amount. Annuity payments will allow you to pay back the loan, while you only spend what is needed.
The sale of the settled agreement should be compared to the loan disbursement. When you sell your annuities, you could be charged a higher fee. This will terminate your settlement, and will make you ineligible to receive payments in the future. If you want to prevent this from happening, you should take the loan as a structured settlement. You will still have to repay the loan.
Although the majority of annuity buyers on purchase 50 percent of the settlements, most of the loans are spread over the entire payment plan. This option provides you with the most leverage, as it will give you a number of spending options. Don’t ever proceed with a structured settlement loan, without first checking the lender’s credentials. Relying on the expertise of a lawyer will protect you from any hidden costs, terms, or conditions.
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