How Should I Spend My Settlement Check?

How Should I Spend My Settlement Check?

  • The Fee Is Free Unless You Win®.
  • America's Largest Injury Law Firm™
  • Protecting Families Since 1988
  • 20 Billion+ Won
  • 1,000+ Lawyers Nationwide

Free Case Evaluation

Tell us about your situation so we can get started fighting for you. We tailor each case to meet our clients' needs.
Results may vary depending on your particular facts and legal circumstances.
Our results speak for themselves

The attorneys featured above are licensed in Florida. For a full list of attorneys in your state please visit our attorney page.

How Should I Spend My Settlement Check?

Your patience has paid off. After several rounds of negotiations, your personal injury attorney has reached a settlement with the other party’s insurance company. Settling a personal injury claim before it reaches the litigation stage represents the most common outcome of the legal process. According to data released by the Bureau of Justice Statistics (BJS), 96 percent of all personal injury claims avoid litigation by ending in a settlement or the plaintiff deciding to drop a claim.

After you reach a legal settlement for your personal injury case, you have to follow a series of steps before your lawyer sends you a check for monetary damages. When the big day arrives, you should have developed a plan on ways to spend your settlement check. You do not have to spend the entire settlement check. In fact, you should implement sound personal finance principles that include saving some of your money for the proverbial rainy day.

Although one of the experienced personal injury attorneys from Morgan & Morgan can make suggestions about ways to spend your settlement checks, we can refer you to a certified financial planner to help you create a sound strategy that stretches your settlement check into years of sound investments. Our primary goal is to get you the compensation you deserve for sustaining injuries resulting from a personal injury incident.

For more than three decades, the highly-skilled personal injury lawyers from Morgan & Morgan have recovered a staggering $20 billion in monetary damages for our clients. We work hard to negotiate settlements to avoid the costly and time-consuming trial phase of the litigation process. However, our talented team of litigators never hesitates to take a case to trial if negotiations stall or break down.

Schedule a free case evaluation to learn more about the legal settlement process, as well as the ways to spend your settlement checks.

Scroll down for more

Get answers to commonly asked questions about our legal services and learn how we may assist you with your case.

Morgan & Morgan

  • What Is the Settlement Check Process?

    Reaching a legal settlement for a personal injury claim typically happens during one of two phases of the litigation process. Discovery is the phase of the litigation process when the legal counsels for both parties exchange information. The information exchanged can lead to the start of negotiations to reach a legal settlement. During the trial phase of the litigation process, the judge hearing a case might ask both lawyers to resolve their differences by negotiating a settlement.

    Regardless of when your personal injury lawyer negotiates a settlement, you follow a series of steps that eventually ends with you receiving compensation for your injuries.

    Agree to a Settlement Value

    The major sticking point of the settlement process involves both parties agreeing to a settlement value. Negotiations can take weeks to unfold and sometimes they end up stalling or breaking down. The back and forth between your Morgan & Morgan attorney and the legal counsel representing the other party can include several counteroffers. The key to avoiding lengthy negotiations is for your legal counsel to present a reasonable value for a settlement, as well as the other party’s attorney presenting a reasonable counteroffer.

    If your personal injury lawyer feels the negotiations are going nowhere, your legal counsel might decide to file a civil lawsuit to apply pressure on the other party’s legal representation.

    Agree to the Type of Settlement

    Now that the most difficult phase of the settlement check process has ended, the next step involves both sides agreeing to the type of check settlement. You have two options for choosing the type of settlement check: Lump-sum or structured.

    You receive the entire value of a settlement when you opt for a lump-sum payment. You get all your money at one time, which prevents inflation from eroding the value of your settlement. However, the other party might not have the money to afford a lump-sum payment, which means you should choose a structured settlement.

    A structured settlement represents a series of payments that typically come on a monthly basis. This method of settlement allows you to budget your income to correlate with monthly expenses. The downside to a structured settlement is your money might lose some of its value because of inflation.

    The personal injury attorney at Morgan & Morgan that handles your case can help you decide which type of settlement works best for your financial status.

    Terms of the Settlement Arrangement

    Next in the series of steps for receiving your settlement check is to agree to the terms of the settlement. Both lawyers establish the rights and legal obligations for each party, as well as verify the legal issues that are settled because of the agreement. Your personal injury lawyer might request provisions to protect sensitive or confidential information. Most importantly, both sides must agree on how the other party should make payments.

    Read, Sign, and Submit Settlement Documents

    One of the reasons an insurance company agrees to a settlement is to be released from future liabilities concerning the same claim. You and your personal injury attorney read, sign, and submit the release form. Other legal documents include the terms of the settlement, as well as the type of settlement payment or payments you should receive. The personal injury attorney from Morgan & Morgan that represents you will ask you to sign all the settlement documents in front of a notary public.

    Your Legal Counsel Receives Your Settlement Check

    Although the settlement check is addressed to you, your personal injury attorney receives the check for two reasons. First, your legal counsel must settle any outstanding liens. The most common type of lien is a medical lien, which is a claim against the compensation you received from the settlement. Second, your legal counsel takes out legal fees and court costs from the settlement check. Most personal injury lawyers work on a contingency fee basis, which means they get paid when you receive your settlement check.

    Receiving the Balance of Your Settlement Check

    If you decide to receive a lump-sum settlement, you receive the balance of your settlement with one large check. A structured settlement means you receive a series of checks that follow a consistent schedule. You can choose to have your check or checks mailed to the address you supplied your personal injury lawyer. Another option is to have your legal counsel direct deposit your settlement check or checks. Cashing your settlement check or checks because you do not have a bank account is the third option, but you must pay check-cashing fees that can substantially reduce the value of your settlement.

  • What Are the Ways to Spend Your Settlement Checks?

    You should devise a personal financial plan long before you receive your settlement check or checks. If you have not come up with a viable financial plan by the time your settlement check arrives, you should consider placing the money in a short-term investment vehicle such as a Certificate of Deposit (CD) that pays interest on the balance of the check.

    When the time comes to implement your carefully thought-out plan, you redeem your short-term investment and start managing your settlement money.

    One important reminder: Settlements from personal injury claims do not get taxed. You do not have to inform the IRS about your settlement money, nor do you have to send the agency money to cover federal income taxes. The only taxes you should worry about concern the income generated from any investments.

    Reduce Your Debt

    Debts like credit cards can take a huge chunk out of the monthly budget because of the exorbitant interest charged by banks and credit card companies. Your priority with a settlement check is to reduce or eliminate your debts. Focus on the highest-interest accounts first and then move down the list until you make yourself debt-free. Taking care of an outstanding student loan should be a priority as well.

    Establish an Emergency Fund

    After you dramatically reduce or eliminate your debts, the next step is to start an emergency fund. Also referred to as a rainy day fund, an emergency fund can help you cover the cost of an unexpected event that puts you in financial distress. An emergency fund ensures all the hard work you did to reduce or eliminate your debts does not go to waste. You do not want to go into debt again after wiping your debt slate clean.

    College Tuition

    Setting aside part of your settlement check or checks for college tuition is an effective way to invest in the future of your children. You also can put aside some money from a settlement check to pay for your continued education, which can lead to higher pay as you receive promotions that are commensurate with your education level and professional accomplishments.

    Invest in Your Retirement

    Before spending any of your settlement money, put a large chunk of it in a retirement plan that matches your age, as well as your financial goals. The sooner you start funding a retirement plan, the more income you generate from compound interest. Working with a certified financial advisor can help you make the right choice for a retirement plan.

    Increase the Value of Your Home

    Your home is most likely the most valuable investment in your portfolio. By completing home improvement projects such as installing a new roof and/or finishing the basement, you increase the value of your house. Using part of your settlement money to pay for home improvement projects represents a sound financial investment.

    Create or Update Will and Estate Plan

    If you received monetary damages for non-economic and punitive reasons, you might have a considerable amount of money left over to create or update your will and/or estate plan. The key is to decide who will make the financial decisions for you if you become incapacitated.

  • Work with an Experienced Personal Injury Attorney

    You might have noticed that many of the ways to spend your settlement checks do not involve spending your money. Saving and investing should be the financial principles you follow when you receive your settlement check or checks.

    The highly-rated team of personal injury lawyers at Morgan & Morgan makes getting clients' compensation our priority. After you receive your settlement check, we can help you make the right choices on ways to spend your settlement checks or refer you to a certified financial advisor who specializes in working with clients that have received a settlement check or checks.

    Schedule a free case evaluation today with one of the personal injury attorneys from Morgan & Morgan to learn more about the ways to spend your settlement checks.

Scroll down for more Load More

How it works

It's easy to get started.
The Fee Is Free Unless You Win®.

Results may vary depending on your particular facts and legal circumstances.

  • Step 1

    your claim

    With a free case evaluation, submitting your case is easy with Morgan & Morgan.

  • Step 2

    We take

    Our dedicated team gets to work investigating your claim.

  • Step 3

    We fight
    for you

    If we take on the case, our team fights to get you the results you deserve.



Customer Story

“I was in a difficult situation when I was injured by a faulty product. I was hesitant to seek legal help but with the help of Morgan & Morgan, they made the process easy. They took immediate action and got me the compensation I deserved. I couldn't have done it without them. I highly recommend their services.” Estate of Patricia Allen v. RJ Reynolds, et al. | 2014

Client success
stories that inspire and drive change

Explore over 55,000 5-star reviews and 800 client testimonials to discover why people trust Morgan & Morgan.

Results may vary depending on your particular facts and legal circumstances. Based on Select nationwide reviews

  • Video thumbnail for 5l3q2e67j8
    Wistia video play button
  • Video thumbnail for yfe952tcop
    Wistia video play button
  • Video thumbnail for z1bqwg9hkl
    Wistia video play button
  • Video thumbnail for s5nb3hnvkv
    Wistia video play button
  • Video thumbnail for t4elibxene
    Wistia video play button
  • Video thumbnail for 5nr9efxqj3
    Wistia video play button
  • Video thumbnail for e8s1x6u5jp
    Wistia video play button