Legally Reviewed by:

Jonathan Rosenfeld

March 2, 2023

Over $400 Million worth of case results

Awarded The Best Lawyer in 2024 by U.S. News

Nationally Recognized in Legal Community

how-personal-injury-setttlements-paid-out After an accident, one of the first things you’ll likely want to do is get your life back to normal, pay your outstanding medical bills and make up for lost wages.

Unfortunately, many people are unaware that their accident will have long-term consequences without knowing how to navigate through getting their life back on track.

Our personal injury lawyers at Rosenfeld Injury Lawyers, LLC, are here to help you through every process, from negotiating the settlement agreement to ensuring you receive fair compensation for your personal injury claim.

We understand that this can be a difficult time, and our law firm is here to help make it a little easier without legal fees.

Contact our Chicago law offices to speak with a personal injury lawyer at (888) 424-5757 (toll-free phone number) or use the contact form today for immediate legal advice on a contingency fee basis. All confidential or sensitive information you share with our legal team remains private through an attorney-client relationship.

How Are Personal Injury Settlements Paid Out; Lump-Sum or Structured Payments?

A lump-sum settlement is an entire settlement for your personal injury case. Lump-sum injury settlements are appealing because they eliminate the need to negotiate with the insurance carrier to pursue compensation in the future. Still, depending on your injuries, this could be a bad idea.

For example, if you have neck and back injuries from a car accident, it makes sense to accept a structured settlement because you could be dealing with these injuries for the rest of your life.

A structured settlement ensures that you receive consistent, steady structured settlement payments each month for as long as you live.

A lump-sum payment is not always the best choice (periodic lump sums can be even better). The size and scope of your injuries will help determine what kind of structured settlement is right for you. Typically, structured settlement pays, especially when you don’t have health insurance for your medical treatment.

Factors That Can Affect Personal Injury Settlements

Many factors will determine how much financial compensation you can receive. For example, even though the federal government doesn’t tax injury settlements, you can still have to pay taxes if you owe taxes from before your settlement.

The attorney you hire to represent you will be the most important factor in determining the success of your personal injury settlement. Still, there are other things that they will consider when negotiating for your settlement proceeds.

Your injuries and emotional distress are important, but they don’t stand alone in insurance coverage. Other factors that determine full settlement money is:

The Policy Limits of the Insurance Company

You (the injured person) don’t have to accept an insurance company’s offer if it’s paid in bad faith, but this will depend on your attorney’s assessment of your bodily injury claim, which will reflect on your settlement draft.

The amount offered may reflect the scope and severity of your injuries and outstanding legal expenses.

The Amount of Money You Have Paid Out on Your Medical Bills

If you have already had to pay for medical care due to the accident with health insurance liens, this will affect how much compensation your personal injury claim will be.

If you have already spent a lot of money, you must get good settlement negotiations to recover financially.

The Amount of Loss of Income

Personal injury settlement funds should cover your loss of income. Funds could include the time you spent in physical therapy or bed, as well as your future loss of income if the injuries prevent you from working again.

The Costs Associated With Your Injuries

Costs can include anything related to your accident, including court fees, attorney fees, and other costs resulting from the accident.

Taxes and Personal Injury Settlement Paid

According to the IRS, some settlements are taxed, but personal injury settlements are tax-free. Though personal injury settlements are generally tax-free, there are some exceptions. If you received an injury claim for punitive damages, this part of your settlement check might be subject to taxation.

According to state law, if you received a settlement check for emotional distress or physical illness, that portion of your compensation would be taxable. Therefore, it would cause decreasing payments of your settlement.

For example, if you were in a car accident, the settlement you received for your physical injuries would not be taxed. However, if you were injured in a car accident and developed an anxiety disorder due to the crash, then that portion of your settlement would be taxed if paid in the tax year.

How Are Personal Injury Settlements Paid Out; When You Will Receive Your Settlement

Personal injury case negotiations can be lengthy, but it is essential to remember that the at-fault party insurer doesn’t want to give you more than what you should get. If your lawyer thinks they will settle for a certain amount, they may attempt to pay early in the time limits.

The good news about personal injury cases is that an insurance company cannot drag the process out forever. Once a certain amount of time has passed, you have the right to file a lawsuit against them for not paying enough money to cover your losses.

Insurance companies will try to offer you a final settlement amount as soon as possible, but often this is just an initial offer. Your attorney will either counter their offer or let them know that they will take the initial offer.

Once this is done, you should receive your settlement check within a few weeks or months, depending on how quickly the settlement check is processed.

How Much Time Do You Have to Decide?

You have a certain amount of time to accept an offer from an insurance company or file a lawsuit against them for failure to pay enough. Exactly how long you have depends on the laws in your state.

It is essential to know that if you don’t accept the insurance company’s offer, they can cancel it and make a new offer at any point during the negotiation process or even after you agree to take their money.

However, if this happens, they are required to give you at least 30 days’ notice before making a new offer. Once you decide, the check will be made to you and your attorney and sent to the law firm.

Personal Injury Medical Liens, Employer Liens and Settlements

When an insurance company offers you a settlement amount, and you accept, your medical providers will still need to be paid. So before agreeing to the settlement offer, remember that various parties, like your doctors, must get paid what they deserve.

A lien secures medical care from a personal injury settlement for people who receive health care services before their case settles.

Once you receive your settlement check, various parties may be entitled to a portion of your award, including your attorney’s fees. Liens are a way to ensure that a medical provider gets paid for their work, and your attorney will arrange this with the insurance company.

Your attorney will handle most of this process for you, but you must cooperate with them throughout the negotiation. If you don’t accept or reject an offer from the insurance company in a timely fashion, the lien may not be paid.

How Long to Pay a Medical Lien

Whether you receive a medical lien will depend on whether your state’s laws allow for this and if the insurance company is willing to pay it. If you do not want a lien, then your attorney or insurer can inform the health care provider that they don’t need to file one with the court.

It is important to remember that you can receive a lien for medical expenses if the insurance company rejects your claim or doesn’t offer enough money.

Your attorney will help increase the settlement if it isn’t high enough, but this may take time and cost money. If you don’t want a lien, your attorney must handle this part of the settlement.

Finally, your attorney can also ask a lien be filed against a third party’s insurance company if they are responsible for your injuries. These bills are usually subrogation liens that will help ensure that the third party pays the full value of your claim.

Hiring a Chicago Personal Injury Lawyer for Your Personal Injury Settlement

Our law firm at Rosenfeld Injury Lawyers collects no attorney’s fees until your claim is won. Our attorney understands the core principles of a settlement payment.

We’re here to help you with a free case evaluation to get the successful settlement compensations that you deserve for your civil claim.

Contact our Chicago personal injury attorneys at (888) 424-5757 (toll-free phone number) or use the contact form today for immediate legal advice and schedule a free consultation. All confidential or sensitive information you share with our legal team remains private through an attorney-client relationship.


Client Reviews

Jonathan Rosenfeld was professionally objective, timely, and knowledgeable. Also, his advice was extremely effective regarding my case. In addition, Jonathan was understanding and patient pertaining to any of my questions or concerns. I was very happy with the end result and I highly recommend Jonathan Rosenfeld.

- Michonne Proulx

Extremely impressed with this law firm. They took control of a bad motorcycle crash that left my uncle seriously injured. Without any guarantee of a financial recovery, they went out and hired accident investigators and engineers to help prove how the accident happened. I am grateful that they worked on a contingency fee basis as there was no way we could have paid for these services on our own.

- Ethan Armstrong

Jonathan helped my family heal and get compensation after our child was suffered a life threatening injury at daycare. He was sympathetic and in constant contact with us letting us know all he knew every step of the way. We were so blessed to find Jonathan!

- Giulia

This lawyer really helped me get compensation for my motorcycle accident case. I know there is no way that I could have gotten anywhere near the amount that Mr. Rosenfeld was able to get to settle my case. Thank you.

- Daniel Kaim

Jonathan did a great job helping my family navigate through a lengthy lawsuit involving my grandmother's death in a nursing home. Through every step of the case, Jonathan kept my family informed of the progression of the case. Although our case eventually settled at a mediation, I really was impressed at how well prepared Jonathan was to take the case to trial.

- Lisa
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