How Personal Injury Settlements Are Paid Out in Memphis, Tennessee

The ultimate goal in a personal injury case is to receive a settlement offer that financially compensates you for your losses. However, you won’t get that money in your bank account when you accept a settlement check. So, how are personal injury settlements paid out in Memphis, Tennessee?

Payout Process for Injury Settlements in Tennessee

Most personal injury claims end in a settlement agreement rather than a trial and court-ordered verdict. The payout process for personal injury settlements has several steps, and it will take some time before the funds actually hit your bank account.

Signing a Release Form 

Before accepting the settlement, you must first sign a release form from the insurance company. Signing the release form waives your right to seek further compensation against the at-fault party. You should always have a personal injury attorney review release forms before accepting a settlement, or else you could hurt your chances to recover additional compensation.

Check Processing

Next, the insurance company will issue a check, typically made out to you and your attorney. However, you can’t just deposit the check right away, as some of that money must go to other things first.

Paying Liens

First, you will need to subtract any amounts you owe to insurance companies or healthcare providers. For instance, if you used your health insurance to cover some of your injury costs, they may have a right of subrogation and can take some of your settlement to cover their costs. Your attorney can negotiate and pay out these liens.

Legal Fee Deduction

Most attorneys work on a contingency fee basis, meaning they deduct their legal fees from the final settlement check. The typical attorney fee for a personal injury case is usually between 33 and 40 percent. So, if your settlement is $100,000, the attorney will take between $33,000 and $40,000, and you will receive the remainder.

Issuing the Check

After all the previous deductions and payments, you will receive a check for the remainder. However, you still have to decide exactly how you want to receive the funds. You have two main options:

• Lump Sum – With a lump sum, you will receive the entire settlement amount in a single, one-time payment. Lump sum payments are the most straightforward option for receiving your money and may be ideal if you still have numerous expenses and need access to liquid funds immediately. However, it can be difficult to efficiently manage a large sum of money when you receive it all at once.
• Structured Settlement – With a structured settlement, you receive regular payments over a predetermined period instead of getting everything at once. You can schedule payments as regularly as you need, whether weekly, monthly, or annually. The main advantages of a structured settlement are that it provides a regular source of income for long-term stability and makes managing your money easier.

Do I Have to Pay Taxes on a Personal Injury Settlement?

Generally, no, you do not have to pay taxes on settlement amounts from personal injury settlements. The reason why is that compensation for medical bills, property damage, emotional distress, and pain and suffering is not considered income but money that offsets your losses—not necessarily a financial gain.

There are two major exceptions, however: First, compensation for lost income is usually taxable because it replaces the normal income you would have earned if you were not injured. As such, you will most likely have to pay regular income taxes on compensation for missing income. An experienced personal injury attorney can help calculate your total tax liability from any settlement money you receive.

Second, punitive damages are not a form of reimbursement, so they generally count as taxable income. Since punitive damages punish the offender, they are not a payment that offsets your losses. Punitive damages are relatively rare, so they likely will not figure into your settlement.

How Long Will It Take to Get My Money?

The amount of time it will take to get your settlement depends heavily on the specifics of your claim. Depending on the complexity of your case and the extent of your injuries and compensation, it can take months or years to get your money.

However, a quick settlement is not necessarily always the best one. One risk of accepting a settlement too early is that the long-term consequences of your injuries might not yet be apparent. If you accept an initial settlement, you will generally lose the right to pursue further compensation. Your attorney can negotiate settlements to receive a higher amount and fight for you to receive the maximum possible amount of compensation.

Personal Injury Attorneys Serving Memphis

Gatti, Keltner, Bienvenu & Montesi, PLC has over 50 years of experience managing personal injury claims and can work to recover your financial settlement with as few interruptions and delays as possible. Contact us online or call today at (901) 526-2126 to schedule a free case consultation with a personal injury lawyer in Memphis, Tennessee.