By: Armada Law LLC December 23, 2024

What Is a Settlement Check and How Does It Work?

Settlement Check Definition: What It Is and Its Purpose

A settlement check includes the funds you receive at the end of your lawsuit. You may receive it after negotiations have been agreed upon by both parties or after the completion of a trial if your case made it to court.

Most personal injury cases will conclude during negotiations, long before they can go to court. Settling a case in this way means less expense during the legal process, though it is imperative that the amount negotiated is fair.

This is often the reason why working with a personal injury attorney is encouraged, especially for serious injuries. Your lawyer will examine all the factors of your case and determine your economic damages, which are the tangible financial losses you’ve suffered as a result of the defendant’s negligence. Usually, these will include your medical expenses, lost wages, property damage, and out-of-pocket expenses.

Your attorney will also help you prove non-economic damages, which are the intangible losses you’ve endured. These typically include mental anguish, loss of enjoyment of life, pain and suffering, and disfigurement. When you have a personal injury lawyer negotiate the settlement amount, their goal is to help make your life as whole again as possible. Once you agree to the settlement and sign the paperwork, there is no going back to negotiate for more, so this amount must be fair.

When you agree to the settlement offered, it is important to understand the settlement check process. A winning negotiation or verdict does not mean you will instantly be handed the money you are owed. There are several steps you must undergo to complete the settlement check process.

Understanding the Settlement Check Process

At the conclusion of your case, you must go through the following settlement check process steps to receive your settlement funds:

Signing Forms

The first step of the settlement check process requires signing a form to release the funds. The attorney of the at-fault party will draft a release form, which is part of the order of settlement paperwork.

Your attorney will explain it in greater detail but signing the form means that you agree to the settlement amount and that you release any and all claims against the at-fault party. Signing the form allows the rest of the settlement process to proceed.

Process and Release of Settlement Check

Once you’ve signed the papers, the insurance company of the at-fault party will need to receive them. They will then process your case and settlement check, sending it to your attorney. The check can take 7 to 10 business days to process on their end, though there could be delays that cause it to take longer. With the right personal injury lawyer, you will be kept informed throughout this process.

Your Attorney Deposits Your Check

You should also be aware that your settlement check will not be sent to you. It will be sent to your attorney, who will deposit it into a trust or escrow account until the funds are cleared by the bank. The purpose of doing things this way is to ensure that the funds are clear and available, which ultimately protects your best interests.

When the funds for your settlement check clear, your attorney will then use it to pay off debts such as any liens against you. They will pay any unpaid medical bills, attorney’s fees, and child support payments that are outstanding. What is left after your lawyer takes out their percentage is then issued to you.

You Get Your Settlement Check

After paying your debts, your lawyer will then write you a check for the remaining settlement funds. This may take up to six weeks, but once you receive it, you can take the money and put it into your bank account. You won’t have to worry about any of the debts you had before and you can finally begin the process of moving on with your life after this challenging event.

Common Uses for Settlement Checks

Many injured victims ask their lawyers, “How does a settlement check work?” Once your debts have been satisfied by your attorney, you can use these funds for just about anything. Common uses for settlement checks include:

Paying Medical Bills

After healthcare insurance bills and liens have been taken care of, you may have other medical bills from your accident. You can use the settlement funds you’ve received to pay for these treatments or for your future medical care.

Handling Monthly Expenses

Many victims in personal injury cases wind up falling behind on their usual monthly expenses. You can also use your settlement check to pay off these debts and get caught up.

Compensation for Lost Wages

Settlement checks can help cover your lost income. Whether you are out of work for a short time or your injuries have rendered you unable to work again, this money can be used as a substitute for a steady income.

When you receive your settlement check, this money is for you to use as you need it. You can choose to receive it all in one lump sum or as a structured settlement. The benefits of each will be discussed by your attorney, who may also recommend that you speak with a financial advisor about what will be ideal in your situation.

Depositing Your Settlement Check

Your settlement check can be deposited in the same way you’d deposit any check. It is best to put it in your bank account but if you don’t have one, you can visit the issuing bank to cash it. There will likely be fees imposed for the service, and you’ll need to bring identification.

Check cashing stores are another option but they have higher fees, especially for larger checks. Ideally, you should open a bank account prior to receiving your settlement check. This will make it easier to deposit the check and gain access to your funds quickly without incurring fees.

Role of Legal Counsel in the Settlement Process

It is possible to handle your personal injury claim on your own without an attorney. However, if you have suffered serious injuries that have completely upended your life, it is recommended that you hire a lawyer.

With the help of a personal injury lawyer, you will have someone who understands the legal process and relevant precedents. They will also be able to look at your economic and non-economic damages to calculate what is fair. When you negotiate a settlement on your own, you may not realize the full extent of your losses caused by the negligent party. Negotiating on these terms may mean that you’re not getting enough money to cover the expenses you’ve already had to pay as a result of the at-fault party’s negligence.

In short, it means you’ll wind up paying out of pocket and possibly sink into debt. Your lawyer will be instrumental in investigating your case to gather all the evidence to present a compelling case. They will use this evidence to negotiate a sufficient settlement amount, and they will be preparing all the while for your case to go to trial.

If you try to handle your case on your own, you may be ill-prepared to deal with a trial. You’ll likely not get the amount you seek, and through it all, you’ll be trying to deal with your personal injury case while recovering from your injuries. Hiring an attorney ensures you can heal and recover without the added stress of trying to understand the legal process.

At Armada Law, we work to turn the tide for you, diving deep into investigations and using our resources to strengthen your case. We understand that what our clients have gone through is difficult and painful, and it often makes the future seem uncertain and scary. We’re here for you throughout the entire process, providing our unwavering legal support in your time of need. Contact us today to schedule a free consultation to learn more about how we can get you the settlement you deserve.