How Are Personal Injury Settlements Paid Out?
The check you receive from a personal injury case is often not the same amount as the settlement. If you work with an attorney, they need to take money out for their legal fees and costs incurred while handling various aspects of your case. They also need to use your settlement to pay your debts, such as medical bills.
You should know what happens to your money when your attorney settles your case to understand how personal injury settlements work. Below is an explanation of the process so you can prepare yourself for the end of the settlement process.
What Happens After Settling a Personal Injury Case
You don’t automatically receive your check when you settle your personal injury case. You must follow the steps below after accepting a settlement offer.
Sign the Release
The insurance company will send you some forms to sign to accept the offer and close out the claim. A crucial form you must sign is the release form. It includes the terms negotiated between your attorney and the insurance company. It also confirms your agreement to release the insurer from further liability. That means you won’t go after them for compensation again in the future for the accident.
Negotiating the terms of a settlement can be complicated. You could face delays if the insurance carrier doesn’t accept the terms or your lawyer believes you should receive a higher settlement than offered.
You should never sign a release without your attorney reviewing it first. They will inform you of your rights and ensure the terms in the release are those you negotiated.
Receive the Settlement Check
After you sign the release, the insurance carrier will mail the settlement check. When you have an attorney working on your case, the check will likely be in their firm’s name and sent to their office. Your lawyer can deposit the check and complete a few steps before writing a check in your name.
Settle Your Debts
Under certain circumstances, personal injury attorneys can negotiate a client’s bills with medical providers. They might even reach an agreement to place the account on hold while the client treats their injuries. That means the client doesn’t have to pay the cost of treatment, and their bills won’t go to collections.
When the case settles, the attorney can negotiate payment with each doctor. Negotiating for a smaller amount than the balance owed is sometimes possible. Your lawyer will pay off your remaining medical costs with part of your settlement. You don’t have to worry about handling those expenses yourself.
Pay Legal Fees
If your personal injury lawyer works on a contingency fee basis, they don’t expect upfront payment for their legal fees. Instead, they take a percentage of your settlement.
After settling your debts, your attorney will take a part of your settlement to pay legal fees and any expenses incurred while working on your case. That can include the cost of requesting copies of your medical records, copying documents for your case file, and mailing letters to the insurance company.
Write Your Check
After handling all necessary expenses, fees, and costs, your attorney will write your settlement check. The remaining balance is yours to spend however you want.
Payments Options for a Personal Injury Settlement
You might not know this, but you don’t necessarily have to accept your settlement as one lump-sum payment. Although many personal injury clients prefer the total financial award upfront, some choose other payment methods.
You could opt to receive your settlement in smaller installments over a predetermined period. For example, you could choose to receive monthly payments to align on a date when you have to pay your bills. Discuss it with your financial planner if you want to receive your compensation on a schedule. You might be able to create an installment plan beneficial for your financial needs.
Whichever option you pick, there isn’t a tax penalty. You don’t have to pay taxes on a personal injury settlement.
Contact Gibson Hill Personal Injury Today
Gibson Hill Personal Injury has fought for Texas clients since 2013. We strive to provide dependable legal representation to people in need. When you hire us, we will treat you as a priority and tirelessly work to try to achieve your legal goals. You can count on us to remain in your corner until the end.
If you sustained an injury in an accident someone else’s negligence caused, call Gibson Hill Personal Injury at 512-580-8334 right now. One of our Texas personal injury attorneys can meet you for a free consultation to discuss the aspects of your case.
Let us help you hold the negligent party liable and recover the compensation you deserve.