How Are Personal Injury Settlements Paid Out?
Personal injury lawsuits can take a long time to settle, but when they do, most victims are impatient to get the settlement payment. However, settlement checks are not given immediately after the case is settled. Liens, legal fees, and attorney’s fees will be paid before the plaintiff receives a check with their portion in the mail.
Following a settlement, there are two common types of compensation. Structured settlements are the first. Structured settlements are paid in installments over a specified time period. Structured settlement payments are preferred by some people because they provide them more control over the money they receive in each installment. The money can be received at various intervals, such as monthly, quarterly, or annually. The amount of money paid in each installment may also differ. In some circumstances, payments may be increased over time by modifying the amount paid to match inflation. This option may be especially beneficial for persons who will be undergoing medical treatment over an extended period of time and whose medical bills may get more expensive as time passes. Similarly, payments might be reduced over time. In some cases, the plaintiff may receive a larger amount of the compensation in the first installment to cover medical bills, mechanical repairs, legal fees, or other expenditures, and then continue to receive funds in smaller installments. Structured settlements are quite flexible in terms of how and when money is paid, as long as it is paid. However, once the structure of the settlement is determined, it cannot be modified. Therefore, the settlement structure should be examined with a financial advisor to ensure that the proper selection is made.
Lump-Sum Settlements are the second type of compensation. The victim will get the total sum in a single installment under this type of settlement. This type of settlement is ideal for persons who wish to invest the money they receive because it is likely to be substantial. One disadvantage of this form of settlement is that financial management abilities are required. Some people are terrible with money and end up wasting it all. You can, however, multiply that settlement if you have solid money management abilities and financial understanding.
What Steps Are Involved in the Settlement Check Process?
Once the settlement has been reached there are some steps before you can actually receive your compensation.
Signing the Release:
The first step after receiving an Order of Settlement is to sign the Release. The release is a legal document that must be drafted by the at-fault party’s lawyer. This document will include all of the payment’s terms and conditions. This document can be short and easy to understand, or it can be long and complex. In certain circumstances, the at-fault party’s attorney makes this document lengthy and difficult to interpret in order to prolong the process. Your lawyer will need to thoroughly analyze the release in order to clarify every detail to you.If your attorney discovers anything with which they disagree, they can contact the defendant’s lawyer to alter the release. If the two parties cannot agree on the terms of the release, a judge will step in to mediate, which will also extend the process. Finally, if both parties’ attorneys have reached an agreement, you will be required to sign it. In most situations, signing the contract also means you agree not to seek additional compensation in the future. To be valid, the document must be signed in the presence of a notary public. After signing, the documentation must be mailed to the insurance company and the defendant’s attorney.
Check is issued by the insurance company:
Typically, the insurance company of the at-fault party is responsible for releasing the check once the release document has been signed and received by them. Insurance companies are required by the law to issue the check as soon as they receive the release. The check will be payable to both you and your attorney.
Check is deposited into an escrow account:
The insurance company will send the check to your attorney’s office and then it will be deposited into an escrow account. The money will remain in the escrow account while the bank clears the funds. Once it has been confirmed that the insurance company has the funds to pay the settlement, your attorney will deduct any unpaid liens from the payment. You can owe liens to a medical service provider due to the accident but if you also owe liens to a party that is not related to the accident you will also be required to pay that lien. For example, outstanding child support obligations are considered a lien that must be paid. Once all liens have been paid, the lawyer will deduct legal fees and costs. Normally, personal injury attorneys work on a contingency basis, this means that they only earn money if their client is granted compensation. Most lawyers fees range between 30 and 40 percent of the settled amount. Nevertheless, the lawyer probably paid for some expenses during the course of the case and these costs will be deducted as well. For example, if you are settled for $200,000 and you had $30,000 pending in unpaid liens, the agreement between you and the lawyer stated that they would receive 33 percent of the settled amount ($66,000) and they spent $7,000 in collecting evidence, hiring expert witnesses, obtaining medical records and other costs, that will leave you with $97,000.
Receive your settlement:
After all liens and legal fees have been paid, your lawyer’s office will mail you a check with the amount of money remaining. You can deposit that check to whichever account you like and use the money to what is more convenient to you.
How Long After Settlement Do I Get Paid in New York?
It is difficult to predict how long it will take for a settlement to be paid. In some situations, the full procedure can take up to 6 weeks. This time could be greater or shorter depending on the constraints imposed by the county and the judge. If the party obligated to pay the settlement decides to appeal a court decision, the payment procedure could be delayed for months or even years.
Are New York Personal Injury Settlements Taxable?
Personal injury settlements for compensatory damages are not taxable. This implies that if you receive reimbursement for medical bills, lost pay, or mental suffering, your settlement will not be taxable. However, if you are granted punitive damages, that portion of the settlement may be taxed.
New York Personal Injury Lawyer
At Greenberg & Stein P.C. We are fully committed to help you in every step of the litigation process. Our lawyers have vast experience handling personal injury claims and dealing with insurance companies that try to delay the payment. Our legal team has successfully recovered millions of dollars for our clients and we have provided support in every phase of the process. Filing a personal injury claim and fighting for your rights can be very hard without the help of a professional. Contact us at 212-969-8775 to schedule a free consultation with our lawyers to review your case.