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Tampa Auto Accident Lawyers > Blog > Personal Injury > How Are Personal Injury Settlements Paid Out?

How Are Personal Injury Settlements Paid Out?


TV and movies often portray legal cases as requiring dramatic courtroom proceedings. The reality, however, is that most legal claims are resolved well before anyone sees the inside of a courtroom, but are decided via settlement negotiations. A settlement is an arrangement between the parties, where one agrees to pay a certain amount to the other in exchange for an agreement to drop the case. Read on to learn more about how settlements are paid out and don’t hesitate to reach out to our legal team for help with your questions and concerns.

Types of Settlement Payouts

While no two settlement agreements are alike, how those settlements are paid usually follows a certain formula and are paid out as:

  • Lump sum settlements, which take the form of a single payment for the entire compensatory amount; or
  • Structured settlements, in which a claimant receives payments over a specific period of time (monthly, quarterly, or annually) until the agreed upon amount has been reached.

There are pros and cons to both types of arrangements. The advantage of a lump sum payment, for instance, is that a person can pay off his or her debts at once and save or invest the remainder. Those who opt for structured settlements, on the other hand, can often collect interest on those payments over time. Many people choose to combine these two methods of settlement. A claimant could, for instance, agree to a structured settlement to be paid over a period of months, following an initial lump sum payment to pay off immediate debts. It’s also possible to enter into a structured settlement where the payments increase over time.

The Process of the Payout

Settlement payouts usually don’t start until several weeks after the parties have reached an agreement and a judge has approved it. This process also requires a number of steps, including signing the release, as well as a variety of other documents, in which the claimant agrees to release the at-fault party from any future claims regarding the accident. Eventually, the at-fault party or its insurer will issue payment on the claim as stipulated in the settlement agreement. Generally, the defendant will write the check and send it to the claimant’s attorney, who will then deposit the funds in a legal trust. After deducting their payment from those funds according to the fee agreement, the lawyer can begin negotiating with creditors and is often able to reduce the amount of money owed, allowing the claimant to keep more of the settlement to cover future injury-related needs. Once all liens, legal fees, and expenses have been paid, the claimant will receive the remainder of the settlement.

The Right Size Law Firm to Meet Your Needs

There are a lot of benefits to negotiating a settlement rather than going to court. Besides saving money and time, settlements can give both parties more of a voice in how their claim is resolved. At Anderson & Anderson, our two dedicated Tampa personal injury lawyers and large support staff can help you pursue your legal claim in the way that is best for you and your family. Call us at 813-251-0072 to learn more.




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