How Are Personal Injury Settlements Paid Out?
From shortly after the moment of the accident, you’ve been intensely focused on your case, and how you and your personal injury attorney can win the money that will help you rebuild your life.
But what happens after you win? How are personal injury settlements paid out? How does the money physically get into your hands? Spoiler alert: It’s a process, and most people aren’t familiar with it until they’ve lived through it.
This post will outline the journey of your settlement check, from start to finish. We’ll list the various stops the money makes and potential delays along the way. In addition, we’ll discuss how a personal injury lawyer helps the process move efficiently and securely.
I met with Harry Brown personally and he sat with me for 20 minutes at our initial consultation to explain everything. He even called after my surgery to see how I was doing. I met with him several more times after that and was kept informed about my case throughout. I highly recommend Harry Brown as an attorney.
The Journey of a Personal Injury Settlement Check
You’re eager to put your accident, medical bills, and case behind you. But for most injured people, that’s tough to do until you have been compensated for your injuries. Understanding the process of how it gets there can make things a bit easier.
1. You Sign the Release Form
Once all parties, including their attorneys and insurance companies, have agreed to an injury settlement amount, it’s time to sign the paperwork. You’ll sign multiple documents, but the most important one is the release.
The release confirms that you won’t try to get any more compensation from the at-fault party or their insurance company and releases the at-fault party and insurance company from any future liability or damages.
Sometimes, the involved parties can’t agree about the terms of the release, even after they’ve agreed on the settlement amount, and this can cause delays. Cases involving minors can also make things more complicated and may have to be approved by the probate court.
2. The Insurance Company Writes a Check
The signed release goes to the at-fault party’s insurer, which will write the settlement check. The check will be made out to you and your attorney and sent to the law firm.
3. Your Attorney Deposits the Check
Your settlement money is now with your legal team but must go through a few more steps before getting to you.
One of the reasons the check was made out to your lawyer (as well as to you) is so they can deposit it into their legal trust account.
4. Your Lawyer Works to Negotiate Past-Due Medical Bills and Other Debts
It’s very common for injured people to owe portions of their settlement to third parties, such as medical providers. Often called “liens,” these debts can be negotiated, and your attorney will fight hard to reduce how much you owe.
Liens against a personal injury settlement often come from:
- Healthcare providers: Typically, health insurance isn’t going to cover all medical expenses, and in cases of serious injury and/or long-term care, the costs can add up fast.
- Government health insurance programs: Sometimes, the state has the power to pursue compensation. For example, if Medicaid paid medical bills, they have rights to the final settlement, and even to file a claim if the injured person doesn’t.
- Group health insurance carriers: If your health insurance company paid your medical bills and they file a valid lien, you may have to reimburse them for the amount they paid. Some health insurance companies do not qualify; your attorney will determine if they have to be reimbursed.
Once all liens are agreed upon, your attorney will pay the lienholders out of the settlement funds.
Be aware that there can be a significant amount of back and forth in this part of the process, and it could add to your wait time.
5. You Get Your Money
Once all liens, expenses, and legal fees are finalized, you will meet with your attorney to finalize your case. They will provide a settlement packet containing a copy of your release and all paid expenses. You’ll then review all documents and sign your final paperwork.
After that, you will receive your check and be on your way! This may be completed in person or remotely and your check can be in paper form or ACH. The peace of mind can do wonders to ease emotional distress long after your accident case is closed.
Speeding Up the Process
You and your personal injury attorney can do a few things to speed up the process:
- Draft a release form as soon as it’s clear what the settlement will be, so you’re ready when it’s official.
- Submit all necessary documents as soon as possible so that the insurance company has what they need to cut the check.
Get a handy guide on the journey of a settlement check when you download our free infographic.
Settlement Payment Options: Lump Sum vs. Structured
You may have options when it comes to how you receive your settlement money. Often, injured people can choose between a one-time, lump sum payment or multiple scheduled, structured payments.
Both options will most likely be tax-free, though if you earn money on investments made with settlement money, you will owe the IRS taxes on those earnings.
If you go for the lump sum, you should generally see the money within about six weeks (just an average settlement payout time), though the entire process could take a few months. You then have the option to invest or use the money however you want.
If you choose a structured settlement, a broker can help you determine the best schedule for payments. The benefit here is that you can ensure the payments align with your budget needs and money management style.
Some of the perks of a structured settlement include:
- Choosing between monthly, quarterly, or annual payments, or a combination
- Increasing payments, which can happen when you earn interest on the settlement or intentionally set the payments to increase
- Decreasing payments, which can be ideal if a minor is receiving the payments from a wrongful death settlement and wants payments to end when they reach adulthood
- One-time or periodic lump sums to supplement cost increases or necessary upgrades
Discuss lump sums and structured settlement payments with your attorney to figure out which would be best for you.
Your Attorney’s Job Isn’t Finished Just Because You Won Your Personal Injury Case
It’s true that the bulk of your lawyer’s job is building a great case and negotiating the terms in your favor. But their job isn’t finished until your compensation is in your hands.
At The Brown Firm, we approach each case with dedication and compassion, helping with the big goals and the small details. Even after we’ve secured fair settlements for our clients, we keep working to ensure that money gets to them as quickly as possible. We’ll also be there if you have questions about the process of getting your settlement check.
Ready to Talk to a Lawyer Who Has Your Back?
Contact The Brown Firm for Service That Goes Beyond the Win
If you or a loved one are facing a personal injury claim and hoping for a fair settlement after a car accident or other incident, The Brown Firm is ready to hear your story. We always begin personal injury cases with a free consultation where we get to know you and your case to determine the best way forward.
Borwick, K. (2021, July 12). How is a settlement paid out? Annuity.org. Retrieved from https://www.annuity.org/structured-settlements/payout-options/
How long does it take to receive settlement money? (n.d.). HG.org Legal Resources. Retrieved from https://www.hg.org/legal-articles/how-long-does-it-take-to-receive-settlement-money-30985
Liens against your accident settlement. (n.d.). AllLaw. Retrieved from https://www.alllaw.com/articles/nolo/personal-injury/liens-against-accident-settlement.html
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.
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