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What Is a Structured Settlement?

If you’ve just won a personal injury case, that means you’ve shown proof of two things: liability and damages.

Proving liability means you and your lawyer have shown that yes, the company or person you sued was responsible in some ways for your injuries. That proof appears in court if the case goes to trial.

But the other side might prefer a pre-trial settlement. That allows them to make an offer and get the matter over with faster.

Either way, the money you receive could get paid out via a structured settlement. But what is a structured settlement?

Read on to find out more about what a structured settlement payout means for your future.

Structured Settlement vs. Lump Sum

Let’s say your personal injury case involves a car accident. The other driver was texting and hit you while you were crossing the street.

The burden of proof is different for a civil suit. You can file one of those even if there were no criminal charges brought by the state. 

But in civil court, your lawyer gets text records showing that yes, the other driver was texting and driving. They denied it to police, but you’ve got records that show them sending a text right before the accident. 

The other side’s lawyers make an offer, and your lawyer negotiates a bit before accepting it. But now you need to decide between a lump sum or structured settlement.

A lump sum is what it sounds like: you get all the money awarded to you at once, minus things like attorney fees. 

Structured settlements are often better for those dealing with the consequences of the accident for years to come, maybe even their entire life. 

Structured Settlement Are Often Safer

A lawyer experienced in navigating these cases will know how to get you the best possible structured settlement for your case.

A structured settlement often requires the other party to set up an annuity, perhaps with an insurance company. This means the money is more secure because annuities have to meet certain regulations.

In other words, the other side can’t store some money under their mattress and vow to pay you a few thousand every few months. It’s more formal than that.

Your lawyer can also answer other questions. For instance, should the payouts start high and get lower, or vice versa? 

You might want to start with higher amounts for the first few years, especially if you’re in a lot of debt. Unfortunately, medical debt is a leading cause of bankruptcy in America. You may need more at first to dig yourself out from underneath the pile of medical bills. 

If your payout isn’t enough, you also have the option of selling your structured settlement and getting cash faster. 

What Is a Structured Settlement?

The above basics should make you feel comfortable answering the question, “What is a structured settlement?” But it’s still a complicated issue that requires expert advice. Don’t try to figure it out alone. 

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