Structured settlements are claims of a plaintiff from a defendant. The usual lawsuits involved in settlements are physical injuries, child and spousal support, and other similar cases. A structured settlement allows the defendant not to pay in a lump sum cash. A plaintiff receives a certain amount of cash periodically is called a structured settlement.
What are the different structured settlements market in the United States?
The primary market involves the plaintiff and the company issuing the annuity. And a secondary market consists companies buying a part or the whole of the structured settlement. Secondary markets occurred because primary markets discovered that structured settlements are highly flexible and liquid. Persons discover the insignificance of their periodic money so they decide to sell it for a lump sum amount.
Example: Mr. Jay and Mr. X had a mobile accident. That resulted Mr. Jay physical injuries. Mr. Jay had a lawsuit with Mr. X. The court ruled in favor of Mr. Jay for physical injuries. Hence, the court ordered that Mr. X pay Mr. Jay an amount of money because of the injuries he has brought to the plaintiff. But, the defendant is not financially capable of paying a huge amount of money. It is proposed by the plaintiff, the defendant or a financial planner that they settle it through a structured settlement agreement. Hence, Mr. X will pay the plaintiff money in a timely manner.
At one moment, Mr. Jay needed cash to create a business. Realizing that he can sell a his structured settlement, he enters a transaction with a third-party to sell his settlement for a lump sum cush. With the transaction, Mr. Jay will receive money depending on how much he has decided to sell.
Structured settlements market in the United States has been the trend of settling payments. And annuity-granting entities also grew large in number. And a new investment opportunity was born because of this.
As this current trend in investing mushroomed, tension between the primary and secondary markets occurred. It is because some trades are not equal and fair. Because of this, a law was passed about transactions regarding the sale of structured settlements.
A statement of disclosure should be established by the 2 parties trading. The statement of disclosure should provide the conditions and terms the parties agreed upon. Provide legal conditions that protect both the seller and the buyer. There is also a need to file documents for the legal proceedings in the court. The transaction?s outcome is in the hands of the court.
Legal proceedings ensure fair business practices, this is to prevent unethical and unfair trades.
The structured settlements market in the United States is predicted to gain more market in the following years. Persons want to deal with their obligations through a structured settlement. If you are financially capable, accepting lump sum money from a defendant isn?t very significant. A structured settlement is the best way of settling your debts or receiving cash.
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