Reaching a settlement on your Albuquerque personal injury case is a big victory, but now it’s time to get your payment. Understanding how a settlement is paid out and who may be entitled to a portion of it can give you realistic expectations for what comes next. A personal injury lawyer in Albuquerque can answer any questions you may have about your individual settlement payment.
Your Options for Receiving a Personal Injury Settlement
How you will receive your settlement payout depends on the agreement that you sign. Typically, you will have your choice between a lump-sum payment and a structured settlement. A lump sum is the most common and delivers the full amount of the settlement to the plaintiff in a single, one-time payment. A structured settlement divides the payout into multiple installments over time.
Both types of payouts have pros and cons. With a lump-sum settlement, you will have immediate access to the full amount of funds to help you pay off related debts and rebuild your life right away. However, if you have a lifelong or severe injury, you should consider conserving a portion of the lump sum to help cover your future medical needs and expenses.
A structured settlement offers greater financial protection over time by drawing out your payment over the course of months or years. Structured settlements are more common in personal injury cases involving catastrophic injuries, large amounts and injured minors.
What Happens After a Settlement Is Achieved?
After a settlement is reached in Albuquerque and a Release of Liability Waiver is signed, the insurance company will begin processing the payment. This is an internal process that takes around two to six weeks, in most cases. Once the check is cut, it will be delivered to your personal injury lawyer, if one was used.
The lawyer will deposit the check into a client trust account, which will then be used to pay off any outstanding debts and costs associated with your case. This can include medical liens from hospitals and doctors’ offices, creditors, and legal fees and attorneys’ costs. If you hire a lawyer on a contingency fee basis, they will take their fee as a percentage of the overall settlement.
An attorney can often negotiate the cost of medical care down to preserve as much of a settlement as possible. The remaining amount after deductions will be sent directly to you, either as your first payment in a structured settlement or a one-and-done lump sum for the full amount.
How Long Does It Take to Get a Check Once a Settlement Is Reached?
It normally takes around two to six weeks to receive a settlement check from an insurance company in New Mexico, depending on processing times. From there, it can take one or more additional weeks to pay off outstanding debts and recover the remaining amount. Note that complex settlements can take longer, such as if there is a need for revisions or multiple parties involved. Complicated cases involving liens could take two to three months or longer.
Are Albuquerque Personal Injury Settlements Taxed?
Most personal injury settlements in Albuquerque are not subject to state or federal taxation. Under Title 26 of the Internal Revenue Code, money earned through financial settlements is not classified as income for federal tax purposes.
Portions of your settlement that are allotted to medical bills, lost wages, and pain and suffering are typically not taxable. Punitive damages, however, are taxed under federal law and must be reported as income. Any interest earned is also taxable. Contact the Fine Law Firm today; a personal injury lawyer in Albuquerque can help you structure your settlement to minimize taxation.