Avoiding “Structured Settlement” Scams

By Staff Writer

Often times, the effects from an accident go well beyond the pain and medical procedures. Often times, the financial aspect of your injury is every bit, if not more stressful.

This “financial” stress can eventually lead to depression and desperation and prompt you to make ill-advised decisions in the hopes of fixing your money situation.

One of these ill-advised moves is to work with a structured settlement company that offers immediate, lump-sum payouts. In exchange, you agree to sell the company your future payments from any settlements.

The problem of course is this comes at a pretty steep price. Typically, structured settlement companies will only offer a fraction of the money you would otherwise receive from your eventual settlement.

If you’re considering a structured settlement for whatever reason, consult with your personal injury attorney and any structured settlement professionals they’ve worked with. Or, you can speak to a trusted financial adviser on how best to sell future payments.

Here are a few things you need to consider:

• Don’t take selling your future payouts lightly
• Explore all other options before deciding to sell your future payouts
• If selling is the only option or even the right option, only work with reputable companies who use a fair and transparent process

Even with laws and statutes in place, many structured settlement companies are able to push through unsavory deals. For example, many states require judicial approval for all structured settlement transactions. The court is charged with ensuring the discount rate and any fees and expenses are fair and in the best interest of the payee (..you) and his/her dependents.

So while there are some protections built in, sound advice is still key.

Structured settlement companies that help accident victims with immediate cash needs are certainly valuable, provided they follow all laws and make sure their customers are given the information they need to make an informed decision.

However, bad apples do exist so only seek out the most reputable structured settlement firms to work with.

Original story appeared in the Fall 2011 issue of The Safety Report

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