Structured settlements are one of the most common types of financial awards made to victims of personal injuries such as car accidents. A structured settlement is an agreement through which a claimant agrees to settle a tort suit in return for a certain structured payment, instead of receiving a large sum of cash in a lump sum as a result of a court ruling. A structured settlement usually takes the form of annuities.
The structured settlement amount is determined according to many factors such as the severity and duration of the claimant’s injuries, the amount of time it will take the claimant to recuperate from his or her injuries, and the financial situation of the claimant and his or her family. In addition to awarding money to pay medical bills and other bills incurred during the recovery process, structured settlements also provide the victim with long-term financial security.
One reason why structured settlements are so popular is that they provide an injured person with a way out from a financial crisis while also allowing the injured person to avoid tax penalties that would have been incurred if the victim had received lump-sum payments at the time of the accident.
This also helps reduce tension and anxiety about the potential out-of-pocket expenses related to recovering from an injury, which many victims and their families may experience. However, while these benefits are valuable, they are not immune from abuse. Some unscrupulous companies take advantage of people who need money quickly, selling them one-time lump sums of money that they say they need only for a temporary crisis.
When buying structured settlements, fraudsters will often promise quick payouts with no questions asked. The only thing these companies can do is collect fees from the victims and then vanish. Some fraudulent companies will offer lump-sum payments but charge high interest rates that make it impossible for plaintiffs to make any reasonable payments towards their claims.
In other cases, these companies will lure individuals into buying a product that promises a large monthly income for a small monthly payment, promising a comfortable lifestyle for the injured person even after their injuries have healed.
Some con artists will sell structured settlements for a profit, offering exorbitant interest rates and other services to encourage people to buy their products. Once someone makes a purchase, the victim’s account is closed and does not receive a payout unless the payout amount is more than the initial investment. Since the victim invested money in purchasing the settlement, he or she cannot receive any form of payment until the company sells the settlement for a profit.
After selling the settlement, the seller then collects the payment from the original victim and keeps the profit. If the company operates outside state laws by circumventing state laws, the victim can be held financially responsible for the remainder of the company’s debt. While this is the worst-case scenario, it has become common for people who have made payments to purchase structured settlements to be cheated out of their fair share of the payout.
