How Are Personal Injury Settlements Paid Out?

When someone files a personal injury claim, the end goal is to receive compensation for your injuries you sustained during an accident. Most of the time, attorneys negotiate with insurance companies and come to an agreement on how much settlement they will pay. A common misconception about personal injury cases are that they are over once a settlement agreement is in place, but once an amount is agreed upon, the money must be paid out. Keep reading to learn the answer to “how are personal injury settlements paid out.

Distribution of Money

Once your lawyer and the insurance company sign a settlement agreement, you must wait for a check. After you receive the money, you will distribute the money and pay off your debts. Typically, you would pay your attorney’s fees, case cost, medical liens, and other debts pertaining to your case first.

Medical Liens

A portion of your check will go towards medical liens. Insurance companies will reach out to you to be compensated for paying for your medical treatment from the accident. Typically, most people don’t pay as you receive medical care and their insurance pays a portion. Once your settlement check comes in, you will reimburse the payments made by the insurance companies. It may be possible for your attorney to help negotiate the value of these liens.

Attorney’s Fees

The other major portion of your settlement check will go towards attorney’s fees. With us, you won’t owe us anything unless we win your case and you receive compensation. We will agree on a certain percentage of your settlement to be paid for our services, and both parties will sign a contract.

Additional Expenses

It is possible for additional bills and expenses to pop up after settlement negotiations have finished. You may have needed more medical care as a result of your accident and part of your compensation must go towards these bills. Other expenses that might accrue include postage, court filing fees, or copy fees.

How Are Personal Injury Settlements Paid Out?

There are a couple of ways you could receive your compensation. You could be given a lump sum payout, which means you would get all of your money in one payment. Structured settlement is the other option, and you would be paid in specific increments over a certain period of time. Your attorney can negotiate with the insurance company to determine which way you’d rather receive your money.

Settlement Taxes

Of course, we can’t forget about paying taxes on your settlement check. If you receive a settlement check after being in an accident, you may be required to pay a portion of your award during tax season the year after you received the funds. Injury settlements aren’t generally taxed as income by the federal government, but punitive damages may be liable for taxation.

Now you how the answer to “how are personal injury settlements paid out,” and where your money goes once you receive the check. If you have been in an accident and are seeking damages from the responsible party, you don’t have to figure it out by yourself. Reach out to one of our personal injury attorneys today to discuss your options.