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Structured Settlements and Factoring

There is much confusion for the consumer when trying to sell their future payments for a lump sum of cash. This article outlines exactly what a structured settlement factoring transaction is.

Author: Andrew Cravenho

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What is a structured settlement factoring transaction? First of all lets talk about structured settlements. A structured settlement is a financial arrangement setup in most cases from a lawsuit settlement, whereby they receive periodic payments, resulting from an annuity to cover medicalexpenses, damages, and losses. This differs from a lump sum payment in that the plaintiff receives a set amount each month for a specific amount of time. This payment is tax free and is a great source of fixed income.

A factoring transaction is very similar to accounts receivable financing. Factoring is a form of commercial finance where a business sells its invoices at a discounted rate. Factoring is also very similar to a commercial loan and is paid back usually in 30 or 90 day terms. Many people ask why wouldn't a company use a traditional bank loan? Factoring has become main stream finance for commercial entities, which in turn develops into relationships.

This allows a business to concentrate on its specialty, while allowing the factoring company to worry about the bills.

A structured settlement factoring transaction is when the annuity owner sells a portion or all of the periodic payments to a factoring company for a lump sum payment. This can occur for many reasons and usually occurs when there is a financial burden in the house hold. These future payments are not actually sold to the factoring company but are transferred. The annuity owner does not own the payments but is a beneficiary to those payments. As the beneficiary, this individual has the right to transfer those payments to the factoring company for a discounted rate.

About Author

Andrew Cravenho is a consultant for StructuredSettlement-Quotes.com. StructuredSettlement-Quotes.com is a http://www.structuredsettlement-quotes.com/structured-settlement.html structured settlements[/url] factoring consultant firm providing multiple quotes from advanced funding companies for future payments. If you would like to receive a quote for your structured settlement or annuity payments visit http://www.structuredsettlement-quotes.com .

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Structured Settlements and Factoring