Structured settlement factoring lets a claimant who receives periodic structured-settlement payments sell some or all of those future payments to a specialty finance company in exchange for a discounted lump sum paid now, useful for a claimant facing an unexpected need for cash that the periodic payment schedule was not designed to cover.

Federal and state law, the Structured Settlement Protection Act framework mirrored in most state statutes, requires court approval of a factoring transaction, generally on a finding that the sale is in the claimant's best interest, along with specific disclosure of the discount rate applied. Factoring companies typically discount future payments substantially, which is the central consumer-protection concern the approval process addresses.

Juricratic does not simulate the factoring transaction itself, but flags an ingested structured settlement's payment stream as factoring-eligible in the case record, which matters for later disputes over the settlement, for example a dispute about whether a factored stream was properly disclosed or approved.

Claimants considering factoring should compare the discounted lump sum against the true present value of the payments being sold, since the applied discount rate can be steep, and courts reviewing a proposed factoring transaction scrutinize whether the sale genuinely serves the claimant's interest rather than just the factoring company's return.