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What Should I Use My Settlement Check For?
The process for filing a personal injury insurance claim can take a considerable amount of time. If you decide to pursue a civil lawsuit, the litigation process typically takes longer than receiving a check from the other party’s insurance company. However, you can shorten both processes by having your personal injury attorney negotiate a settlement.
When you file an insurance claim or a civil lawsuit, you seek monetary damages to compensate you for expenses such as medical bills, property damages, and lost wages. You also might receive punitive damages if the other party committed one or more acts of negligence. Although seeking monetary damages can help you recover most, if not all of your out-of-pocket expenses, you should not expect a quick resolution to your case.
At Morgan & Morgan, we have helped clients recover monetary damages and collect insurance payments for suffering from an injury or injuries. Since 1988, our experienced team of personal injury lawyers has won lawsuits, as well as negotiated favorable insurance settlements. Our goal is to help you receive the compensation you deserve as soon as possible after a personal injury incident.
Learn more about how we help clients recover monetary damages from insurance companies and civil lawsuits by scheduling a free case evaluation.
What Is a Legal Settlement?
Before you learn the answer to “What do I use my settlement check for,” you should understand the basics of civil litigation.
A settlement for a civil lawsuit represents a legal option that keeps you out of a courtroom. The legal counsel for each party works out an agreement that is favorable to both the plaintiff and the defendant. Although your personal injury attorney might reach a settlement before the start of litigation, most personal injury cases that go to trial get resolved during or right after the discovery phase of the legal process.
The discovery phase allows the legal counsel for both parties to review the same evidence and interview the same witnesses. If the lawyers representing each party feel there is a chance to resolve the case without going to trial, then negotiations start between the attorneys. Negotiating a settlement frequently occurs because both lawyers believe the evidence and witness accounts point to the same judicial decision.
Settling your personal injury lawsuit out of court delivers several benefits. First, you receive compensation long before you would if your case went to trial. Second, you do not miss work because you have to testify or attend a hearing for another reason. Third, keeping your case out of court eliminates the stress and anxiety that often accompanies a personal injury trial.
What Is the Process for Receiving a Check?
Settlement checks cover just about every type of personal injury case, including auto accidents, slips and falls, product liability, and premises liability. However, you do not receive your settlement check on the day when both parties agree to a resolution of a personal injury case. You must follow a series of steps before you receive the compensation that you deserve.
Sign a Release Form
The other party seeks a settlement to prevent any future legal action for the same case. This means you must sign a release form that “releases” the other party from future legal obligations for the same personal injury litigation. You cannot pursue additional legal action for the incident in question.
Process the Release Form
The other party’s insurance company processes the release form before issuing a settlement check. In a vast majority of personal injury cases, the other party’s insurer sends the settlement check to the plaintiff’s attorney. Although payable to both you and your lawyer, your attorney receives the check until certain events unfold.
Deposit the Check
After receiving the settlement check from the other party’s insurance company, your personal injury lawyer deposits the check into an escrow account until the check clears. Once the settlement check clears, your lawyer distributes the settlement money according to state law. You are legally obligated to pay off a few debts that are associated with your personal injury case. For example, if you owe money to a healthcare provider for the cost of running diagnostic tests, you must pay off the debt directly from your settlement check.
Most personal injury attorneys work on a contingency fee basis, which means they get paid when their clients receive a settlement check. After you receive your settlement check, the first thing to do is pay your personal injury lawyer. Once your attorney receives a percentage of your settlement, the rest of the money triggers the question, “What should I use my settlement check for.”
What Is a Medical Lien?
A medical lien represents the formal legal process that uses a portion of your settlement check to pay off the medical debts that are directly associated with your personal injury case. A third party manages the medical lien to ensure every healthcare creditor receives compensation for conducting diagnostic tests, implementing a treatment program, and overseeing physical therapy sessions. You also have to pay off a medical lien for prescription medications and the use of assistive devices.
One of the reasons for hiring an experienced personal injury attorney from Morgan & Morgan is to make sure a medical lien does not include debts that are not related to your personal injury case.
What Are the Possible Delays for Receiving My Settlement Check?
According to the law, you should receive a settlement check right after both parties agree to resolve the personal injury claim. However, you might encounter one or more delays for several possible reasons. The most common reason is the insurance company involved with your case discovered one or more unsigned or improperly signed legal documents. The insurance company also might have experienced a technical glitch while processing your settlement check.
Your personal injury lawyer stays on top of the status of your settlement check and remains in constant communication to keep you informed about timelines and the potential issues processing your settlement check.
What Do I Use My Settlement Check For?
You have received your personal injury settlement check. The financial windfall is secured in your preferred bank account. Now, the time has come to answer the question, “What do I use my settlement check for.”
One of the services that Morgan & Morgan provides for our personal injury clients is to recommend ways to use the money from a settlement check. There is not a template for planning your financial future, but many of the same issues are the same despite your unique financial situation.
Know the Impact of Taxes
Understanding how much of your settlement money gets taxed represents the first step in managing your finances properly. You should receive advice on paying taxes from one of the estate planning attorneys at Morgan & Morgan. We can suggest ways to shield your money from local, state, and federal taxes. Most types of judgments and settlements are subject to federal income taxes.
Addressing tax issues before finalizing a settlement gives you keen insight into how much money you will have leftover for yourself.
Pay Off Non-Lien Debts
You have already taken care of the debts covered by liens. After you receive your settlement check, you should decrease or pay off other types of debts, such as a mortgage, credit cards, and student loans. Paying off your debts removes costly interest charges from your monthly bills. It also frees up more money for you to use for other expenses.
Create an Emergency Fund
You would think Murphy’s Law refers to personal finances. What can go wrong will go wrong for issues like a natural disaster or medical emergency. Start growing an emergency fund to take care of unexpected expenses. Peace of mind alone is more than worth putting aside some cash for the proverbial rainy day.
Invest Your Money
Get your settlement money to work for you by investing it in relatively safe stocks and bonds. Working with a certified financial advisor can help you make the right decision that matches your unique financial status, as well as your long-term goals. Income-generating investments can help you beat inflation whenever it rears its ugly head.
One of the best investments you can make for your future is to open a retirement account.
Go Back to School
You can advance your career by enrolling in continuing education classes. With online education programs offering you the most flexibility, you can earn a degree from the comfort of your home or in a booth at your favorite coffee shop.
Increase the Value of Your Home
A healthy settlement check can help you complete projects that increase the value of your house. Maybe you want to replace an aging roof or build an outdoor living space. Whatever the reasons, using a large personal injury settlement check for home improvement projects can make you more money by enhancing the value of your home.
Donate to a Charity
Donating to your favorite charity builds goodwill in the community. It also generates positive tax implications. You can deduct donations to charities, as well as ask your financial advisor to establish a charitable trust. All the money you place into a charitable trust remains tax-free until the end of the trust’s life.
Become an Entrepreneur
Your personal injury check might be enough money for you to have seed money for a new business. Conduct research on your preferred business niche and lean on a trusted financial advisor before you leave your job to run a new business. The last thing you want is to drain your settlement check on a business venture that never had a chance of succeeding.
One thing you do not want to do is to become a lending machine for friends and family members. You want to keep those relationships clear of any financial disagreements.
Schedule a Free Case Evaluation
There is too much on the line for you to trust an inexperienced personal injury attorney with the handling of your case. Working with an experienced personal injury lawyer from Morgan & Morgan ensures you get the best settlement deal possible. We will educate you about the settlement check process, as well as suggest ideas on how you should use your money. Ultimately, the answer to the question, “What do I use my settlement check for” comes down to what you want for your financial future. We are here to help you, but the decision is all yours.
Start the personal injury claim process today by scheduling a free case evaluation with one of the highly-rated personal injury lawyers from Morgan & Morgan.