Se Habla Español
When you reach a settlement in a personal injury case, you might think the hardest part is behind you. The negotiations are done, and the compensation has been agreed on, but now you’re left wondering how that money makes it into your hands.
A settlement isn’t as simple as a direct deposit hitting your bank account overnight. It follows a structured process, and understanding each step can help you prepare for what comes next. A personal injury lawyer will handle the settlement correctly so you don’t run into unnecessary delays.
Once a settlement is reached, the insurance company or the defendant must process the payment. It’s rarely an immediate transaction. Insurers and defendants often have internal procedures before they release funds, which can involve approvals, paperwork, and financial reviews.
A settlement agreement will outline how and when the payment will be made. If an insurance company is responsible for paying, they typically have a set period to issue the check. If a business or individual is paying out-of-pocket, there can be additional delays, especially if structured payments are involved. Your attorney will ensure the timeline stays on track and that no party tries to delay the process unfairly.
Before a payment is made, you must sign a settlement agreement and release form. This document finalizes the case and states that you’re accepting the agreed-upon amount and giving up any right to further legal action related to the injury. It’s not something to sign without understanding every detail.
Your personal injury attorney will go over the agreement to ensure it matches the terms you agreed to. Some insurance companies try to include unfavorable clauses or unnecessary restrictions. Your attorney will review everything to prevent you from unknowingly forfeiting rights that can affect you in the future.
Once you sign, the defendant or insurance company processes the paperwork and issues payment. The timeline for this varies, but it’s often between two to six weeks unless complications arise.
The settlement check doesn’t usually go straight into your hands. In most cases, it’s sent to your lawyer’s office first. The law firm deposits the check into a client trust account. This step ensures the payment clears before it’s distributed. It also allows for any necessary deductions to be handled before you receive your final amount.
Your attorney will notify you once the check arrives and clears. At this point, they’ll calculate any deductions and provide a breakdown of the final amount you’ll receive.
A settlement isn’t always as straightforward as keeping the full amount. Some deductions may be necessary before you receive your portion. Your lawyer will explain what needs to be deducted and why.
One deduction can be for legal fees if you hire your attorney on a contingency basis. This arrangement means they worked on your case without upfront payment and will receive a percentage of the settlement. Your lawyer will have already discussed their fee arrangement with you, so this won’t surprise you.
Another deduction can be for medical liens. If you received medical treatment but haven’t yet paid all your bills, your attorney may have to use a portion of your settlement to cover those outstanding costs. Some healthcare providers and insurance companies place liens on settlements, expecting to be reimbursed before you receive your money. Your attorney will work to negotiate those liens so they don’t take more than necessary from your settlement.
Settlements can be paid out in one of two ways: a lump sum or structured payments. The option that applies to you depends on the details of your case and the settlement agreement.
A lump sum payment means you receive the entire settlement at once. It’s the most common method, and most people prefer it because they get access to their money immediately. A personal injury lawyer will ensure that the full amount owed to you is properly released without unnecessary delays.
Structured settlements work differently. Instead of receiving the full amount at once, you get payments over time. This setup is common in high-value settlements or cases involving minors. The payments might be scheduled monthly, annually, or in another agreed-upon arrangement.
Most personal injury settlements aren’t taxable under federal law as long as the compensation is for physical injuries or illness. However, some parts of a settlement can be subject to taxes. For example, if a portion of your settlement includes compensation for lost income, that part might be taxable since earnings would have been taxed if you had earned them normally.
Your personal injury attorney will ensure you understand how your settlement is classified so you’re not caught off guard when tax season arrives.
Sometimes, a defendant or insurance company might try to delay payment. This can happen for various reasons, including internal processing issues, financial problems, or even an attempt to pressure you into accepting less money.
If a payment deadline passes and the defendant hasn’t issued the check, your personal injury attorney will demand action. Legal penalties sometimes apply if a defendant fails to pay within the agreed timeframe. Your attorney won’t let them drag their feet or attempt to delay your compensation unfairly.
Once all deductions are accounted for and any necessary payments are made, your lawyer will issue you the final settlement amount. The payment is typically made through a check or direct deposit, depending on your preference and the law firm’s policies.
At this stage, you can finally use your settlement however you choose. Some people use it to cover ongoing medical expenses, while others pay off debts or invest in their future. Your lawyer will have already ensured you received everything owed to you, leaving you free to focus on moving forward.
Emmanuel Sheppard & Condon will ensure you understand every step of the process. You’ll get the full amount you’re entitled to, and if any issues arise, your attorney will handle them so you don’t have to worry about delays or unfair deductions. Contact a legal professional to learn more.