What Is An Advance Cash Settlement And When Is It Used

TaxAct

When someone suffers injury an as a result of the actions of another individual, they often file against that person for a settlement. If the court finds in favor of the injured party, the defendant is liable to pay a settlement to that injured party. This cash payment will either be a single payment, or in installments over a period of time.

Payment by installment is preferred by many people. It is easier to manage the tax on smaller amounts, and, on occasion, a structured settlement by installments may not be subject to tax.

It may be that while the trial is taking place, the plaintiff finds themselves in financial hardship. If they are injured they may be finding it hard to find a job. In this case some choose to take advantage of an advance cash settlement, taken out against whatever may be awarded in the outcome of the lawsuit. This is a low risk option for the plaintiff as, if they lose their case, they are not obligated to repay the money loaned. However, the interest rates on these settlement loans tends to be high, so taking out a loan needs careful consideration.

If a plaintiff decides that they do want to go ahead with a loan, they should inform their lawyer immediately about their plans. This is so their lawyer is not surprised when the lender contacts the lawyer to find out how the case is going. Plaintiffs need to be aware that lenders only want to make loans to plaintiffs who have a good chance of being successful in court.

What Is An Advance Cash Settlement And When Is It Used by
Rating: 4.8/5. From 2 votes.
Please wait...