Structured Settlements:

Factoring Transaction

The term structured settlement factoring transaction means the transfer of structured settlement payment rights (including portions of structured settlement payments) made for consideration by means of sale, assignment, pledge, or other form of encumbrance or alienation for consideration. Structured Settlements are legal agreements between two parties whereby one party agrees to make payments over time in exchange for their release of liability to another party. Structures are usually associated with personal injury claims in which a plaintiff (structured settlement recipient) agrees to accept annuity payments from an insurance company in exchange for release of liability against a defendant. Structured settlements serve an important role and more often than not will meet a payees’ needs for full term of the payout. However when unplanned, immediate financial emergencies arise, recipients often seek immediate cash from their settlement payments. They may have lost a job or have divorced, need to save a home from foreclosure, have encountered medical emergencies or face any number of other reasons to liquidate all or a portion of their timed structured settlement payments. A structured settlement factoring transaction typically involves a judgment whereby a court will determine "best interest" considerations of a payee. In the US, 40 states have already passed "transfer" laws relating to structured settlement factoring transactions and these have been designed to provide protection for the consumer. The first structured settlement factoring transaction took place in 1988 and created what is called the structured settlement secondary market.

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It uses material from the Wikipedia article "Structured settlement factoring transaction".