There are a ton of statistics that talk all about the amount of people who win structured settlements from an injury, and others that talk about people who win settlements from lottery winnings. What is less talked about are the way the payments to the recipients are structured and then how they wind up using the money they got from the structured settlement. If you spend anytime watching TLC (The Learning Channel) you will probably end up watching a show called, ‘The Lottery Changed my Life.’ What you will learn from that show is that the majority of lottery winners end up going bankrupt just a few years later.
Lets take a second and think about why people cannot manage their funds following an annuity judgement. The vast majority of settlements that go to a trial are work related accidents and car crashes. Know lets take another to think about the type of people who would pursue the maximum winnings from such a case. For a moment we will completely set aside the people who legitimately need the money to pay for medical costs and other damages. Lets focus on the people who see dollar signs in their heads when they get a minor injury.
These people have not structured their financial situations in a way that will position them for greater success. The reason they have dollar signs in their eyes is because they probably are in huge debt or are really coveting other peoples property. So they are more prone to pursue more than what they deserve in a settlement case. As time goes by they use the money not to pay bills but to acquire things, televisions, cars, homes etc. All things they can obtain with a down payment but that they cannot afford over the long term.
This puts them in a situation where they need someone to buy structured settlements from them, so they can receive the lump sum payment now. They have huge debt and need the lump sum to get out. Usually the structured settlement company will negotiate some really strict rules as far as buying the settlement. Often times if the consumer would simply manage their funds better, they would not be in a scenario where they need the lump sum payments.
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