A structured settlement loan isn't a real loan. You cannot borrow against your settlement payments — federal and state anti-assignment rules prohibit it. What people call a "structured settlement loan" is actually the sale of payment rights to a factoring company, which requires court approval. The term is a misnomer; the actual process is a court-supervised buyout.
What is a "Structured Settlement Loan"?
The phrase shows up in ads, on payday-loan comparison sites, and in search results. It's misleading. A loan, in the legal sense, is money a lender gives you with a promise to repay, plus interest, secured by collateral. None of that is what happens with a structured settlement.
What actually happens is one of two things:
- Sale of payment rights (most common). A factoring company buys some or all of your future structured settlement payments from you, in exchange for a lump sum now. You give up the right to those future payments. This is a transfer, not a loan.
- Pre-settlement funding (different thing). If your case hasn't settled yet, a litigation finance company may advance you money against the expected settlement. This is a cash advance, secured by the case outcome. It's only loosely related to structured settlements proper.
Both require court approval. Both involve a discount rate, not interest. Both are governed by state structured settlement protection acts, not consumer-loan law.
Why Traditional Lenders Won't Touch Structured Settlements
State structured settlement protection acts (currently in 46+ states) make it nearly impossible to use settlement payments as collateral. The exact restrictions vary, but the common features are:
- Anti-assignment clauses built into the original settlement agreement
- Court approval required for any transfer of payment rights
- A "best interest" standard the judge applies to the seller (not the buyer)
- Required disclosures and, in some states, mandatory waiting periods
- Independent professional advice (often an attorney) before the sale
This is why no reputable bank, credit union, or online lender will quote you a "loan against" your structured settlement. The legal framework doesn't support it.
For the state-by-state breakdown, see our Structured Settlement Regulations guide →
What You Can Actually Do (The Four Real Options)
1. Sell some or all of your future payments
To a verified factoring company. This is the most common route. Court approval required.
2. Sell only a portion of the payments
A "partial buyout." Many companies prefer this, and courts often do too. You keep enough income to cover essentials.
3. Negotiate a change to the payment schedule
Directly with the insurer. Rare, but possible in some cases — for instance, to defer a payment during a hardship.
4. Do nothing
The court will only approve a sale if it's in your best interest. If you don't need the cash, selling may not be.
How Discount Rates Work (and Why the "Loan" Analogy Breaks Down)
A sale of payment rights works on a discount rate, not an interest rate. The discount rate is the percentage the buyer keeps as their profit. Industry range is roughly 9%–18% for established factoring companies, with outliers on either side.
| Scenario | Future payments | Discount rate | You receive |
|---|---|---|---|
| $1,000/mo for 10 years | $120,000 | 12% | ~$58,000 |
| $2,000/mo for 20 years | $480,000 | 14% | ~$170,000 |
Numbers are illustrative — actual discount rates depend on payment timing, your state's protection act, the buyer, and court findings. Run your own numbers with our Structured Settlement Calculator.
Court Approval — The Part Buyers Can't Skip
Every state that has a structured settlement protection act requires a court hearing before a sale is final. The judge reviews:
- Whether the sale is in the seller's best interest (and their dependents')
- Whether the seller received independent legal or financial advice
- Whether the discount rate and terms are fair
- Whether adequate money will remain for the seller's needs
A buyer that tells you "no court hearing required" is not one you want to work with. Our Best Practices guide covers what to look for.
Verified Companies That Handle Structured Settlement Transactions
SettlementDirectory.net lists 61+ verified companies that buy, broker, or advise on structured settlement transactions. Each listing is checked for association membership (SSP/NSSTA), state licensing, and complaint history.
Verified Buyer 1
Factoring company, 25+ years active, NSSTA member
Verified Buyer 2
Broker network, multi-state, SSP member
Verified Buyer 3
Annuity-issuer affiliate, in-house processing
Verified Buyer 4
Broker, attorney-supervised process
How to Compare Verified Buyers
Don't get a quote from one company. Get three. The difference between offers on the same payment stream can be tens of thousands of dollars.
- Use our Compare tool to put two or three companies side by side
- Look at discount rate, not just headline "you'll get $X"
- Ask whether the company is a direct buyer or a broker (brokers take a fee, then resell to a factoring company)
- Check the company's state coverage — some operate in only 10–15 states
- Check association membership — SSP and NSSTA members sign codes of conduct
See our Verification Standards for how we evaluate each listing.
Frequently Asked Questions
Can I get a structured settlement loan from a bank?
No. Anti-assignment rules in your settlement agreement and state law make it impossible. Any "loan" advertised against a structured settlement is actually a sale of payment rights.
Is a structured settlement loan taxable?
Sales of structured settlement payment rights are generally not taxable to the seller if the underlying payments were tax-free (i.e., from a personal physical injury or wrongful death claim). The lump sum retains the same character as the original payments. Confirm with a tax professional in your state.
How long does the process take?
Typically 45–90 days from initial quote to court approval and funding, depending on the state and court calendar.
Do I need a lawyer?
Most states require independent professional advice as part of the court approval. Some buyers pay for it; some don't. Our Best Practices guide covers what to ask for.
What's a "good" discount rate?
Industry range is 9%–18%. Anything above 20% is unusual and warrants comparison shopping.
Get Quotes from 3 Verified Companies
Compare verified buyers in our directory before you commit to a sale.