A lottery win or victory in a lawsuit can net you a lot of money. What many people don't realize, however, is that in many cases the winnings or settlements will be paid out over the course of several years… a situation that many people are unprepared for and which lands them in financial troubles while they're waiting for the next payment to come.
There are ways around the lull in between settlements, however; in many cases an individual can find a lender who can consolidate some or all of the remaining settlement into a single payment via a loan.
Defining structured settlements
The first thing that you need to do when looking for a loan to consolidate your settlement payments is to understand exactly how the payment system works. When you receive a settlement from a lawsuit, win the lottery or amass other large winnings, or are due a large amount of money from certain other sources, in all likelihood you aren't going to be able to receive all of the money at one time. Instead, a structured system of payments will give you portions of the money at regular intervals usually once per year.
Depending upon how much money is being distributed, the structured payments may take 10 or 20 years, or more. In most cases where structured payments are being made, you either do not have the option of up-front payment or you will have to accept a much smaller amount to receive it in a lump sum.
How consolidation loans work
If you want to receive a larger portion of your structured settlement without having to wait the years it takes for the money to trickle in, consolidation loans can help you to get what you need. Basically, the consolidation loan grants you an advance on your money, with the payments being transferred to the consolidating lender. Of course, there will be additional fees and charges associated with the loan (with the funds for them being deducted from the loan amount), but once the loan is approved and the structured payments are transferred to the lender you won't have to worry about making payments on the loan after that. As the structured payments are made, the loan will be repaid.
Finding a consolidator
Finding someone to consolidate your structured payments can be a bit more of a hassle than finding most other loans. It's often best to consult an attorney in your area who specializes in financial law, since there are some official legal transfers that have to be made in most cases. The attorney will usually arrange all aspects of the loan from that point, and will retain their fees from the total loan amount. If you are unable to find an attorney to act as consolidator, contact lenders in your area and see if they can recommend someone; you might also want to consult local accountants to see whether they might have any recommendations.
Getting your loan
In most situations you will be able to have the consolidated loan amount deposited directly into your bank account, or at the very least held in escrow until you can work out a deposit solution with the bank or banks of your choice.
Some consolidators will simply draft you a cheque for the total loan amount, so you should be aware of their practices before you choose your consolidator. The escrow method is probably the best option for you, since you don't have to worry about distributing the money or risking losing the cheque.
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About The Author
John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the http://www.directonlineloans.co.uk website.