How Structured Settlements Are Being Traded?

Individuals and organizations are known to make a lot of money from trading structure settlements. But what are structure settlements and how can they be traded? Structure settlements are legally binding contracts on individuals, institutions and organizations dictating that a certain amount of money has to be paid to a claimant over a period of time as a compensation for a loss or some sort of damage.

If an individual files a tort suit claiming financial compensation for injury or damage of any sort and the amount being granted by a court id high the defendant, through their legal representatives may beg the court to reduce the amount to be paid over a period of time in annuities. If the court deems fit the defendant may be asked to pay a lump sum and pay the rest over a period of years as annuities.

Getting a tort as annuity has an advantage. The pinch is not felt by the defendant who may not find it necessary to negotiate on the amount, while the claimant will be better able to manage small sums of money over a period of time instead of spending all the money received as a lump sum as a result of bad financial management.

However, many claimants, who accept a structure settlement, find it a bit unattractive a few years down the line. Some may just need a huge sum of money for reasons best known to them and they wish they never had accepted the settlement. For these individuals purchasers of structured settlements can be a way out.

There are individuals who are constantly on the look out for a secure and lucrative investment opportunity. For them buying structured settlements is a very attractive opportunity. Investing in a structured settlement has a distinct advantage. The returns are guaranteed by a court of law, default in payments carry a very heavy penalty in most cases and the returns are just unmatched.

So how does one make money by buying a structured settlement? The answer is simple: the deal is in the sellers' requirement! The seller of a structured settlement may be in need for a lot of cash. This seller may agree to sell the structured settlement fro a sum of money that is about 30 percent lower than what the total payout would amount to. Since a structured settlement buyer is a long-term investor they buy these settlements at lower prices and have the seller transfer receiving rights of the annuities to them.

The annuities then become the installments for the sum of money paid out when the structured settlements were bought. Any additional delay penalties monies that exceed the amount paid for the structured settlements minus the transaction fee for the brokers are the total profit. This profit may be as high as 25 percent!

There are online portals that deal in transferring of settlements. They have a list of people waiting to invest in the settlements and match these buyers up with people wanting to sell their settlement. The site assists with the legal documentation and charges a small fee for their services. It may take just a few days before a lucrative deal becomes a reality using their services.