A Typical Settlement Check Timeline

After you suffer injuries in any personal injury case, you may be able to recover compensation by filing a claim with insurance or a lawsuit in court. Because settling is less expensive than going through to trial, most parties settle cases out. However, even after settlement, many steps need to take place before you see your money.

The Settlement Check

After settling a case, you can expect to receive compensation from the opposing party, or their insurer, in the form of a settlement check. The amount of settlement check is however much you and your attorney were able to negotiate for, ideally enough to cover all your damages, including past and future medical expenses and other costs.

A case could settle after you finish recovering, meaning the check amount might not account for any anticipated future expenses. For those who sustain severe or catastrophic injuries, the amount could reflect how much you will likely need to cover the expenses of treating your injuries in the future.

Your attorney, along with medical professionals, will estimate how much money you might need for future medical expenses and lost wages. In some cases, your attorney pays your existing medical expenses out of the money you receive from the settlement before cutting your check. In other cases, it is up to you to pay your existing medical debts.

How Long Does it Take to Get Paid After a Settlement?

Getting to a settlement is itself a long and often arduous process. It is natural that once you’ve finally agreed to a settlement, you want to know how quickly you will get your check. Usually, the insurance company forwards the settlement check to your attorney. Your first question when you hear that is probably “How long can a lawyer hold your settlement check?”

Once your attorney receives your check, several steps happen. Your attorney cannot hold your check for an unreasonable amount of time. The attorney can hold the check until it clears the bank and for the time it takes to disburse the funds. Depending on the type of check and the amount, it could take 14 days for the check to clear.

When the check clears, the attorney deducts their fees and costs, as most personal injury attorneys do not charge legal fees upfront, but instead take their fee from whatever compensation they can recover on behalf of their client. The attorney may also pay the medical expenses and other hard costs you incurred from the time of the accident to date.

The attorney then cuts a check to you for the amount that is left. It could take from 30 days to six weeks after settlement negotiations for this process to play out.

Do I Have to Pay Taxes on My Settlement Check?

Generally, no. However, whether you have to pay taxes depends on the unique circumstances of your case. Your attorney or accountant advises you as to whether the IRS or state government will tax any of your settlement compensation.

Steps Toward Getting Your Settlement Check

Once you reach an agreement to settle with another party, one of the attorneys must draft the settlement agreement with the terms you agreed on. The drafting attorney then forwards the draft agreement to the other party’s attorney. If the other attorney has changes, they discuss the changes with the drafting attorney. If the attorneys cannot agree, they may have to review transcripts or other notes to “refresh” both attorneys’ memory of the agreement.

Once the attorneys have resolved any issues with language in the settlement agreement, you and the other party must sign the agreement. You might also need to sign a release to receive your settlement. The Release states that you accept the settlement and that you have no additional claims against the defendant. Often, a settlement agreement contains a release.

Before signing the settlement agreement, you might want to review it to ensure both attorneys put all of the terms and conditions you agreed to in the settlement. If you have any questions or concerns about anything in the settlement agreement, ask your attorney for an explanation.

#1. Processing and Check Release

Your attorney forwards the documents to the insurance company’s attorneys after you sign them. Once the insurance company receives the signed documents, it processes the documents and forwards the settlement check to your attorney.

#2. After Your Attorney Receives the Settlement Check

Once your attorney receives the check, they deposit it into a special trust account in which they are legally required to hold client money. Once the bank clears the funds, your lawyer can take the next steps. Depending on the size of the check and the bank, it could take up to 14 days for the check to clear.

#3. After the Check Clears

Your attorney will pay liens and outstanding expenses you have that are related to the accident, such as unpaid medical bills.

Additionally, if your insurance company covered any medical expenses, lost wages, or other damages, your attorney might need to cut a check to your insurance company for reimbursement.

Finally, your attorney deducts legal fees and costs that you agreed to when you signed the contingency agreement. Some of the costs that you might have include deposition costs, expert witness costs, investigators’ fees, and the costs involved with obtaining evidence, such as medical records.

#4. Your Final Settlement Check

Your attorney will then cut a check for you for the balance of the money left from the settlement.

After You Receive Your Settlement Check

Once you receive your settlement check, it is yours to spend to cover your expenses. If you are still getting treatment for injuries or if doctors expect your injuries to become long-term or permanent disabilities, you should set aside enough money to cover your medical expenses and buy insurance if you no longer have health insurance through your job.

Injuries that Could Become Permanent Disabilities

Car accidents, slip and fall incidents, dog bites, and several other accidents could cause catastrophic injuries. These injuries are those that often lead to permanent disabilities, leading to life-long expenses your settlement should take into account.

Injuries that could lead to permanent disabilities include:

  • Traumatic brain injuries: Including penetrating and non-penetrating injuries. Doctors also consider mild concussions to be traumatic brain injuries. With some of these injuries, you could recover within days or weeks, and others could cause permanent disabilities.
  • Neck and shoulder injuries: Some neck and shoulder injuries could affect your spinal cord, leaving you in constant pain or even partially or fully paralyzed.
  • Back and spinal cord injuries: Back injuries could affect your spinal cord. The vertebrae in your back protect the spinal cord, but vertebrae are no match for some kinds of accidents. Pinched nerves, crushed discs, cracked vertebra, and other injuries could cause full or partial paralysis or could cause neuropathy, where you lose some feeling and might feel tingling in parts of your body.
  • Internal injuries: Depending on the internal injury, you could require extra medical care or additional surgeries.
  • Crushed bones and/or multiple fractures: If the accident crushes bones, doctors might have to amputate a limb. Even multiple fractures could cause long-term disabilities depending on how the bones break and how the doctor must repair the breaks.
  • Eye injuries: If you damaged your eye beyond repair, you might not have additional medical expenses after recovering, but you could need additional care to help you with daily chores.

Recovering Damages After an Accident

Your settlement check should cover all of your expenses and impacts, beyond mere medical expenses. You can collect two types of compensatory damages after an accident, including economic damages and non-economic damages.

Economic Damages

Economic damages, also called special damages, have an already quantified value that objective measures,  such as medical bills, can verify. Economic damages include:

Medical Expenses

After most accidents or incidents caused by someone’s negligence, you will likely suffer injuries you need to pay to treat. Depending on the severity of the incident, your injuries could last weeks, months, or the rest of your life. You can recover compensation for medical expenses from the time of the incident through your settlement. Additionally, you can recover compensation for future medical expenses—those you may incur after you settle.

Medical expenses may include:

  • Surgeries, including additional surgeries when doctors cannot make all repairs during the first surgery
  • Follow-up appointments
  • Appointments with other doctors and medical professionals
  • Prescriptions and over-the-counter drugs recommended by medical professionals
  • Ambulatory aids
  • Therapy appointments, including physical and occupational therapies, and cognitive and other psychological therapies
  • Retrofitting a vehicle with hand controls
  • Renovating a home to add wheelchair ramps, widen doors, add grab bars, and other accessibility aids
  • Long-term care, either in-home or at a facility
  • Part-time or full-time rehabilitation facility services

Wages and Earnings

Immediately after the accident, you most likely won’t be able to work. For the time you are out of work, you can recover compensation to replace the income you lost, right up until you settle. If your doctors believe that your injuries will be long-term or permanent disabilities, you can also recover compensation for lost earning capacity.

Your attorney looks at your current salary, age, and your retirement age, which varies depending on the industry you worked in, cost of living increases, and probable wage increases to determine a fair and reasonable amount for loss of earning capacity.

Personal Property

Depending on the type of accident or incident, the at-fault person could damage your personal property, including your vehicle, cell phone, computer, clothing, and other items of value. You can recover compensation to repair or replace any property destroyed in the accident or incident.

End-of-Life Expenses

If you lost a loved one in a car accident or other personal injury accident, the estate could recover compensation for funeral expenses, burial expenses, and cremation expenses. Your estate might also recover other expenses, such as probate court filing fees.

Non-Economic Damages

Non-economic damages, also called general damages, do not have an objectively quantifiable monetary value. Nonetheless, they help make a victim whole again, just as with economic damages.

Non-economic damages may include:

  • Pain and suffering, including emotional distress. If you lost a loved one because of someone else’s negligent actions or inactions, you could also potentially collect compensation for emotional distress.
  • Loss of quality of life, if you have to make significant life changes, such as taking prescriptions or using ambulatory aids for the rest of your life.
  • Loss of companionship, if you can no longer enjoy or participate in family activities and events or if you cannot participate in your family’s daily life.
  • Loss of consortium, if you can no longer have a physical relationship with your spouse.
  • Loss of use of a body part, such as a leg or a finger.
  • Loss of use of a bodily function, such as your bladder or your eyesight.
  • Amputation of a digit or a limb.
  • Excessive scarring and/or disfigurement, such as that you would receive from severe burns or a back injury that does not allow you to stand properly.
  • Inconvenience, if you have to hire someone to do the chores you normally do, such as house cleaning, lawn maintenance, grocery shopping, and home repair and maintenance.

As with medical expenses, you might have other ongoing costs because of your injuries. For example, you might have to set aside money for someone to mow your yard or take you grocery shopping for the rest of your life. Your settlement check should cover all of the expenses you incurred because of an accident that you didn’t cause.

There is no reason you should have to be accountable for them. Keep this in mind as you negotiate your settlement so you do not agree to anything until you feel it is fair. Remember, to get your money, you must sign a release, so you cannot go back and get more if you incur additional medical expenses or other expenses.