Settlement: Releasing the Claim

2007-03-08 10:33:40

( Financial )



Settlement in legal terms refers to a resolution of an existing conflict through an arrangement that involves the concurrence of all parties involved. Mostly settlements refer to a financial problem that has found a resolution.

Settlements are arrived at with both parties meeting half way, and both agreeing to the terms of the agreement. These settlements are done in the presence of lawyers and are legally binding. Failure to follow the settlement terms and conditions can result to legal consequences and possible jail term.

If you are an aggrieved party and plan to sue for damages, you can avail of lawsuit advances to finance your case. Lawsuit advances are lawsuit cash provided by companies who in turn will get a percentage of the damages or settlements that the court will give you. However, if you lose the case, the company cannot get the lawsuit advance money back – it is a loss they have to absorb.

For companies in the lawsuit advances business, it is a calculated risk: they weigh the chances of you getting money through out-of-court settlements or winning the case and then decide if they will fund the lawsuit or not.

Either way, a settlement is paid full in cash or comes in the form of structured settlements. If you are the plaintiff, these are the options available to you. Receiving the full amount in cash may mean that you will receive an amount lower than the original figure. This depends on the agreement that you have entered into.

Structured settlements, meanwhile is receiving the payment in staggered basis instead of a lump sum. This means that like pension, you are guaranteed to receive a certain amount on regular and fixed basis.

While a lump sum provides you with more options as to how you want to use the money, you also run the risk of not being able to control the spending. Structured settlements can provide greater stability and security for you in the long run. Both options have pros and cons and what will suit you depends on your circumstances.


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