Like thousands of other personal injury victims, you decide to seek justice for your situation. You find a personal injury attorney who decides to take your case on contingency, (which means you won't have to pay any fees until after you win). Then, after a short while, the plaintiff decides to enter into a settlement to avoid going to court. You and your lawyer are now victorious, but what happens next?

Well, usually the payments from a personal injury lawsuit are divvied out through monthly payments. This is especially the case for settlements worth several thousand dollars. Consider my own personal experience, where my parents won $1 million for my brother's cerebral palsy lawsuit. Instead of receiving the money upfront, they get a certain amount each month. The amount rises after he turns 30.

Of course, your settlement will probably be divvied out differently, but the principle is still the same. And, unless your lawyer negotiates other arrangements, your only other option for a nearly full cash-out would be a structured settlement.

How does a structured settlement work? With a structured settlement, a third-party pays out most of your money in exchange for a fee. And, as you might expect, this fee is usually a percentage of your original settlement.

For example, if you won a settlement for $30, 000, a structured settlement company might want 20% of that, (which is $6, 000). This amount would be subtracted from your settlement, so you won't have to pay anything you can't afford upfront. As a result, you would receive $24, 000. Sure, it's lower than your initial settlement, but at least you're getting most of your money in a lump sum.

However, you will want to be careful when choosing this option. Going back to my own personal experience, when I talk with my mom she says she's glad she didn't receive the settlement money upfront. By keeping things as they were, she was assured that my brother's expenses would be taken care of for the rest of his life.

This is something you may want to consider for your own situation. True, it's nice knowing you have tens of thousands in your bank account, but also remember that the more money you have, the more you'll be tempted to spend. The $24, 000 you have right now might end up being $0 within just a year, (or even less). In fact, this could happen even if you have $1 in your bank account.

In conclusion, a structured settlement is an option for people who want a lump sum from their personal injury lawsuits. However, make sure you budget appropriately so you won't end up being broke.