Settlements 101: How Are Settlements Paid Out?

Do you have a pending lawsuit that is close to reaching a settlement? You’re going to ask, “How are settlements paid out?”

One survey of personal injury plaintiffs found that about 67% of respondents received some form of settlement. The settlements averaged about $52,000.

If you think you’re going to see a similar settlement, you need to understand how settlement payments work. It’s not always as simple as getting a nice fat check.

Read on to learn about the different settlement payments and how settlements are usually paid out.

What Is a Structured Settlement?

In a settlement negotiation, the insurance company may offer to pay your claim as a structured settlement.

This is when settlement payments are distributed over time. For example, you have a $500,000 settlement. The insurance company might offer to pay $100,000 now, then $50,000 a year for the next eight years.

The insurance company may offer to pay the same amount every year without an inflated first payment.

The typical way we think of settlement payments is in a lump sum. That’s when the insurance company gives you one check for the entire settlement. You’ll usually get a lump sum for smaller settlement amounts.

There are advantages and disadvantages of each payment structure. You should consult with your attorney to find out which one is the best for you.

How Are Settlements Paid Out?

Now that you know the different settlements, let’s take a look at the settlement payment process. Settlement checks aren’t sent directly to you.

They go to the attorney. Remember, when you hired the attorney, you agreed to pay them a certain percentage of the settlement.

They’ll take the attorney fees, plus any other fees related to your case. You also have to pay medical bills and resolve any outstanding debts related to your case.

You may have liens on your property that need to be removed. Paying these debts is the best way to do that.

There could be taxes that need to be paid out as well. This is something that you should discuss with your attorney.

You get the leftover funds after the bills, attorneys, and taxes have been paid.

Can I Sell My Structured Settlement?

What happens if you’re in a lot of financial trouble and you know that structured settlements won’t help you get out of it?

You still have some options. You can sell a structured settlement. This is also called pre-settlement funding.

It’s like getting a cash advance for your structured settlement. That will give you the financial relief you need. See here to learn more about how this process works.

Understanding Settlement Payouts

You don’t need to ask “How are settlements paid out?” 

There are differences between structured settlements and lump-sum payments. No matter what type of settlement you get, the payout process is the same. You get the last bit of money after everyone else takes their share.

If you found this article to be helpful, be sure to read the other great content we have on this site.

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