How Are Personal Injury Settlements Paid Out?

When a California personal injury case gets resolved, claimants want to celebrate and receive the compensation they are owed as quickly as possible. However, several steps need to be completed before a settlement check is cut. This includes choosing how the claimant wishes to get paid: a lump sum vs. a structured settlement.

Steps Involved in the Payout of a Personal Injury Settlement

A personal injury settlement refers to a private agreement made between an insurance company and the individual who filed a claim. It is an out-of-court arrangement that exchanges an agreed-upon amount of money from the insurer for the release of any further liability.

Once the settlement paperwork is signed at the resolution of a personal injury claim, this initiates a chain of administrative steps and processes that must be completed before the insurance company will distribute the funds.

In most cases, a settlement check is deposited into a trust account created for the claimant. Portions of the settlement will be deducted to pay off any outstanding medical debts or liens, as well as case-related expenses. If the claimant hired a personal injury lawyer in Los Angeles, the attorney’s fee will be deducted before the remaining balance is distributed.

Choosing How to Receive Your Settlement

It is up to a claimant how he or she wishes to receive a personal injury settlement; all at once or in periodic installments. This is an important decision that can affect the claimant’s financial future. For this reason, it is recommended to consult with a personal injury lawyer about the right choice for your unique needs and circumstances.

Lump Sum 

A lump sum pays the entire amount of a settlement to the recipient at once. The claimant will receive one check with the full balance (after any deductions). Lump sums are a good choice if a claimant wishes to have cash upfront to pay off large debts or liens. 

However, a lump sum payment can come with the risk of spending the money too quickly and not reserving enough for future expenses. For this reason, it is a common choice for claimants who do not anticipate significant future costs or financial losses.

Structured Settlement

A structured settlement provides multiple payments of smaller chunks of the settlement to the claimant over a period of time. When this type of payout is chosen, the claimant can create a schedule of desired payments over the course of several months or years. Once a payment structure is selected, it is difficult to make changes.

Structured settlements are popular among plaintiffs who have long-term losses from a severe injury, such as a permanent disability that takes the victim out of work. The structure of a payout plan can give the claimant financial stability and greater peace of mind for the future. 

Hybrid Settlement

A hybrid settlement combines a lump-sum payment with a structured settlement to address a claimant’s unique needs. The first payment may be larger, for example, to pay off major medical debts. Then, the remainder may be divided into multiple payments to provide ongoing financial support moving forward.

How a Los Angeles Personal Injury Attorney Can Help With Your Settlement

How you wish to receive a personal injury claim settlement is not a decision you should make lightly. It could impact your future quality of life. Contact an experienced attorney to help you choose the right route for you and your family. A lawyer can organize your settlement in a way that protects your best interests.