A structured settlement loan is primarily a cash advance that you can apply for while your lawsuit is pending or after you have won the case and want a cash advance on a structured settlement. This is not a traditional loan; it has some distinct differences. We’ll discuss some of those differences and also the pros and cons of applying for one of these loans.
Some of the Benefits of a Structured Settlement Loan
When a claimant wins their case but received a structured settlement, they may have to wait months or even years to receive the full amount of the award. The claimant receives a fixed amount of money per month. A structured settlement loan basically “cashes out” the terms and allows the person to enjoy the full amount of money all at once.
In some cases, a person can receive a structured settlement loan while the lawsuit is still pending. The availability of this kind of loan is based primarily on how strong your case is. You basically receive a loan against the money you will receive if you win your case. One benefit of this loan is that you do not have to repay it if you lose the case.
Some Drawbacks of a Structured Settlement Loan
While there are several benefits to this type of loan, we also need to talk about the negatives, because there are some. One of those is the fact that there will be taxes and fees involved. The money you receive is taxable, so you will have to pay state and federal taxes on the loan for the calendar year in which you receive it. Many people are also required to pay a self-employment tax on this money as well. You can also expect to pay a higher interest rate with this type of loan as opposed to a more traditional loan.
Applying for a Structured Settlement Loan
If you are planning to apply for a structured settlement loan, there are several pieces of information you will need in order to do so. Here is some of the information you will need:
- Plaintiff’s full name
- Plaintiff’s addres
- Plaintiff’s contact infomration such as phone or email
- Counsel’s full name
- Counsel’s firm name
- Counsel’s Firm Contact information
- Other information such as the date of the incident, summary of the incident, damages or losses overview, and the loan amount
There are definite pros and cons for choosing a structured settlement loan. And each person’s situation is unique, so you’ll have to thoughtfully consider it. If you’re thinking about one, do a lot of research and weigh your options carefully before proceeding.