When it comes to making a legal liability go away with a financial payment, nothing beats a lump sum settlement. In short,
this kind of payment takes care of the problem in one shot. The party with the claim accepts the payment as the final
closure of the matter, and the payer is released from any further interaction with the claim.
Definition of a Lump Sum Settlement
A lump sum settlement represents exactly what it sounds like: a payment for a debt or claim in its entirety is made one
time. The payment wipes out any further demands or claims made by a party on another for accepting the settlement.
Even if there is a change of mind after the fact, the payment bars any return of the
In the case of marriage dissolution, a lump sum settlement can address a number of
years of obligations of legal support in one payment as well. An agreement is reached
on what a total sum should be for alimony support and a divorcing spouse pays it to
avoid any future monthly payments. It provides a clean break from any further
uncomfortable transactions of the old marriage now dissolved. In legal terms the
payment is called "alimony in gross".
How Lump-Sum is Different From Structured
A structured payment involves a payment broken into multiple periodic payments over
a long period of time. Many parties that involve large multi-million dollar payments try
to steer settlements to structured payments instead. While the obligation remains the
same, the financial hit on a cash flow basis is far less and more manageable from
year to year. The lump sum payment involves one payment for the entire obligation. There is no long period involved.
Once the payment is made, the issue is over and all parties involved go their separate ways.
Why Lump Sum Settlements Can Help
When a person is injured it's not as if he can sit around and just wait for litigation to be resolved. Medical bills have racked
up quickly to thousands of dollars. Lost time from work can also have cost a couple of paychecks if the person did not
have a fulltime job with health benefits. And even those who are so lucky can run out of covered time under the Family
Medical Leave Act (FMLA) if the injury recovery lasts a prolonged period of time. Eventually, the injured person begins to
tap into personal resources and savings just to keep the bills paid and hold onto the house, so to speak.
In this respect, a lump sum settlement can address a whole number of financial problems stemming from the injury right
away. Legal representation, medical care, related debts, and needed medical equipment call be paid for right away. This
makes a significant amount of stress and worry go away immediately.
Lump Sum Settlements - Home
Before you grab that fast cash, learn what’s involved with Lump Sum Settlements