A lump sum settlement is exactly what it sounds like. A financial judgment is awarded to an injured individual with payment being issued as one payment. This type of payment is preferred to the standard, which is a structured settlement, which gives the paying party the opportunity to make payments to the injured party over a period of time.
Getting a lump sum settlement allows the injured party the opportunity to pay off medical bills and other bills that may have gotten behind due to a lack of income from the injured party, who may or may not have become disabled at the time of injury. Lump sum payments also allow the injured party to make purchases in cash that may not otherwise have been possible, such as a new home for a newly disabled person.
Rarely are settlements paid in a lump sum fashion. More often, these awards are made in a structured settlement fashion. This type of arrangement oftentimes leaves the injured party scrambling to make ends meet. That’s where settlement-funding companies come in. Investors who offer to exchange a lump sum payment for your structured settlement payments often run these companies.
While this sounds like a dream come true, consider this. Investors are in the business to make money. When you exchange your monthly payments for a lump sum settlement, you are, in essence, giving away a portion of your award. Sometimes the amount that you forfeit can be as much as half. Depending on your current situation, this may or may not make sense. Carefully consider all your options before deciding on this option.
If you are a victim of an injury and have received an award, ask your attorney if your payment can be made in a lump sum settlement. If not, ask your attorney if he can refer you to a reputable settlement funding company, if having the largest amount of money in the shortest amount of time is necessary for your situation. Most of the time, attorneys can point you in the right direction and help keep you from taking a larger hit than is necessary.