Cash Settlement FAQ

What is a Structured Settlement? Structured settlements are structured cash payments through an annuity system that is established to compensate injury victims for their losses. Structured settlements are the other alternative payment system to a lump sum cash settlement and are set up to provide payments to you over time. Structured settlements received special legislative treatment by the U.S. Congress in 1982, as a way to make large settlements more agreeable to the payor, who does not need to come up with a large lump sum, yet still provide certain protection to victims. Return
When are Structured Settlements Used? Structured settlements are designed for many other types of cases though including:
bullet Severe injury where there is long-term treatment requirements, where future medical costs will necessarily be incurred, and to meet living and family expenses.
bullet Worker’s compensation cases where the injured party may not be able to work or at least work to the earning capacity that they would otherwise have enjoyed.
bullet Permanent or temporary disabilities that will take extensive recovery time
bullet Wrongful death cases where a surviving family will need a regular income to replace that of the lost spouse/parent
bullet Guardianship cases where there are minor children or another person who is judged to be incompetent such as a person with psychological, emotional, or mental handicaps Return
Touted Benefits of a Structured Settlement.
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Structured settlements provide a cash flow that is completely tax liability free.
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There is added security in receiving smaller amounts of cash over time. Many seniors are the target of greedy people and a large pot of available cash can make them an even more attractive target to conmen, and subject them to permanent loss of assets if they are grossly mismanaged by a trustee.
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Recipient doesn’t have to worry about investment strategies or not adequately planning for the future. Those who do not receive structured settlements must concern themselves with making sure that they do not overspend from an account that looks like it should last forever, and subject the entire award to financial risk.
bullet Structured Settlements are often arrived at without the risk and time loss of going to court. For many reasons, defendants who believe they could have liability will make an offer of a structured settlement to minimize their costs. Few people relish the idea of going to court including defendants because while there is the potential for coming out ahead, there is also the potential for coming out much farther behind than a negotiated structured settlement would give them. In most cases, settling a case with structured settlements can minimize the risk to both sides. In most cases where the structured settlement is made out of court, attorney fees will be much cheaper than if litigation is required. If your attorney does not need to go to court, you can see their fees be reduced by as much as 8% of the total settlement. On a one million dollar settlement, that means about $80,000 more for you. Return
The Periodic Payment Settlement Act. In 1982, Congress passed The Periodic Payment Settlement Act of 1982 (Public Law 97-473), which legally recognized structured settlement cases in physical injury cases, also encouraged people to use them by granting them tax-free status. This act allowed people to financially benefit and protect themselves from the hazards of a lump sum settlement, and gave courts the ability to make such an award where there was a realistic potential for abuse of the proceeds of a lawsuit. Return
Structured Settlement Payments. When a structured settlement agreement is reached on the benefits to be included, the defendant will agree to fund a stream of cash to the victim. The structured settlement payment obligation is then legally assigned to an independent third party that has experience in this area, usually a life insurance company. In theory, the victim is protected from further legal complications or financial hardship of the defendant. The structured settlement is generally set up as some sort of an annuity that makes payments according to the prescribed and agreed upon schedule. Return

Can I Use My Structured Settlement as Loan Collateral? Generally, the answer is no. The laws regarding structural settlement are designed to protect you from abuse, and the ability to use the structured settlement as collateral would void that intended purpose. The payments however, can be claimed as a form of income so that if you want to buy a house, the payments represent the same financial ability that a take home paycheck of the same amount would provide. Return

Do I Get Interest on My Structured Settlement? No. The interest is a part of your structured settlement agreement and is therefore, tax-free. You do not then get interest on top of that. Return

Is Turning My Cash Flow Payments Into One Lump Sum like Renegotiating the Structured Settlement? On the surface, they may sound the same, but they are not. The structured settlement may not be paid out in any different fashion than initially agreed upon. What you are doing is selling the payments to RAM Funding. We would receive the payments just as you would have over time. What RAM Funding does for you is to buy the payments for a percentage of the the gross proceeds. Return

Why do I get only a Percentage of the Gross Proceeds? When we buy your structured settlement, RAM Funding is taking risks that are attached to inflation, and we also need to make money in the transaction. As a result, the amount that you receive will be less than the face value of the structured settlement. Return