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Reasons Why You May Walk Away With Less Than Your Settlement Amount
The relief of winning or settling your personal injury case can be quickly followed by uncertainty. What comes next? When and how do you get your settlement? More than that, you might be confused if the amount of your earnings is smaller than what was discussed.
After settling your case, you won’t get a check from the defendant or the insurance company directly. Instead, the payment goes to your attorney, who puts it into an escrow account to pay liens and litigation expenses.
After the costs have been settled, only then are you given a check with the remainder of the settlement funds.
We will help break down each part of your case after the settlement to make sure you always feel well-informed.
What Is an Escrow Account?
An escrow account is a legal holding account where a third party temporarily holds funds until certain conditions have been met. For instance, an escrow account is usually used for real estate deals until the purchase agreement is fulfilled.
In law, the escrow account is also called the client’s trust. It acts as a safeguard to protect the settlement against an agreement breach from the defendant or the plaintiff. Your attorney will be responsible for handling the money in that trust with careful reporting to the court since they are playing the neutral third-party role in this process.
Rest assured, the procedure for managing the escrow account is strict and well-regulated; a lawyer can even lose their ability to practice law if they fail to handle the settlement funds as mandated.
What Is a Lien?
Before your settlement check is cut, your attorney will pay your case's liens and potential litigation costs out of the escrow account.
A lien is a legal right that allows a third party to take part of your case’s earnings, usually as collateral for any debts incurred as a result of your injury.
Medical liens are particularly common in personal injury cases. Your health care costs may have been initially paid by your health care insurance provider – and they will expect to be paid back if you received compensation specifically to cover those medical costs.
If you didn’t have adequate health care insurance or required treatments that weren’t covered by your insurance (or if you didn’t have insurance), the hospital or doctors that provided your treatments may place a lien on your eventual settlement.
Liens aren’t necessarily a bad thing in the context of personal injury claims. They help ensure people who might not have tens of thousands of dollars on hand or great health care plans can still receive exceptional medical care after being involved in an accident. That said, if you feel that certain liens are unfair, you can discuss it with your attorney, and they can contest it in court if necessary.
How Will You Receive Your Settlement Amount?
After all the expenses have been covered, it is finally time to receive your portion of the payment. There are two ways that your settlement check can be paid to you: either through structured payments or a lump-sum payment.
A structured payment means your settlement amount is given in installments over time. If you want to make the money last for as long as possible, this might be the ideal solution. This can be especially valuable in wrongful death cases or cases where a person’s ability to earn a living has been severely impacted by their injury. A structured payment plan can replicate a traditional salary and makes it more difficult to spend a lump sum irresponsibly or inefficiently.
You can also increase or decrease the amount over time before the settlement structure is determined. If you’re undergoing prolonged medical treatment and payment is expected to become more expensive with time, you might want to save more of your compensation for the future.
On the other hand, if you have many bills to pay right away (i.e., car repairs or vehicle replacement, home modifications for a disability related to the accident, etc.), having more of the money right away might suit you better. Either way, this must be decided before the settlement is finalized, which your lawyer can assist with.
The other option is a lump-sum payment, which is when the client is given the total sum of their settlement in a single amount. If you’re looking to invest your earnings or hand them over to a financial manager, this might be your preferred payment plan.
Work with a Personal Injury Lawyer in Atlanta That Will Communicate With You Openly and Actively
Your case deserves proper attention, even after the gavel has been struck or a settlement agreement has been signed. Our team of personal injury lawyers at the Law Office of Rickard, Drew & Nix will work closely with you, keeping you informed about your case every step of the way. Call (404) 588-1001 to schedule a free consultation today and discuss your situation with a dedicated legal team.
