Personal injury settlements in Alabama and Mississippi are typically sent to your attorney, deposited into a client trust account, and held until the check clears and any liens, case costs, and attorney’s fees are resolved. Your lawyer then pays you the remaining balance, usually by check, either as one lump sum or through structured payments.
Although reaching a settlement ends the dispute, payment is not instantaneous. In this guide, Andy Citrin Injury Attorneys explains each stage of the payout process, what may be deducted from your recovery, and what can delay your settlement check.
What Is a Personal Injury Settlement?
Many people think that jury awards and settlements are the same thing. While they are similar, there are some differences.
- Settlement: your personal injury lawyer negotiates with the insurance company, and it agrees to pay you a set amount of money to resolve your case out of court.
- Jury award: sometimes called a verdict, this is compensation you collect after winning your case at trial.
Lawyers use many tools when negotiating a settlement. Initially, your personal injury attorney will issue a demand letter, where they outline your case’s strengths and request compensation for your injuries. Then, they will go back and forth with the insurance adjuster, trying to arrive at a fair number.
Sometimes, your case might go to mediation, where a neutral, trained professional will hear both sides of the case and try to find common ground. (The judge might even order you and the insurance company to mediate your case.)
However, at the end of the day, the result of a personal injury settlement is the same. When you take a payout, you give up your right to file a lawsuit or ask for more compensation. So, you should never take the decision to settle lightly.
Types of Settlements: Lump Sum Payouts vs. Structured Settlements
If you can choose between a lump sum or a structured settlement, it’s important to understand the differences. There are pros and cons to each option that should be considered.
Lump-Sum Settlements
With a lump sum, you get the full amount of your settlement all at once. This allows you to manage your money and allocate it however you choose. You may choose to invest a part of your settlement or to buy or improve your home.
This option is best for someone who has a long-term financial plan and is good at managing a budget.
Structured Settlements
Typically, with a structured settlement, the insurance company will buy an annuity (a type of investment) for you. Based on the terms of the annuity, you will receive regular payments over a period of time.
Some people prefer a steady stream of income over time to a single payment, especially if they have a tough time managing money. However, you might not have the funds right away to make larger purchases or fund an investment account.
There are other pros and cons to structured settlements. For example, some annuities, called life-only annuities, only pay out benefits during your lifetime. If you pass away, the payments stop. If you were seriously injured or have a limited life expectancy, a life-only annuity might not be a wise decision.
As you talk through your options with your attorney, consider your current financial situation and your goals for the future. Also consider your money management habits and any other factors that may affect how you will use the money.
How Are Settlements Paid Out?
Once you’ve agreed to a settlement, the insurance company will send your lawyer a series of documents that you will have to sign. Once all the paperwork is processed, the adjuster should send your lawyer a check for the agreed-upon amount.
Your attorney will help you complete the settlement process, which might include the following steps.
Resolving Medical and Other Liens
If you owe your doctors, health insurance company, or other parties money, they might file a lien in your case. For example, if you owe past-due child support in Alabama, you might have to pay the Child Support Enforcement Division part of your settlement. And Medicare and Medicaid can also demand reimbursement for medical bills that they covered.
When someone files a lien, they are claiming that they have a legal right to part of your personal injury claim.
You must take care of these liens as part of your settlement. However, don’t panic. Our lawyers know how to negotiate with medical providers and other entities and can sometimes reduce these liens to a fraction of their original amount.
Can Child Support Be Taken From a Personal Injury Settlement?
If you owe past-due child support, part of your personal injury settlement may have to be used to pay that debt before you receive the remaining funds. This does not necessarily mean that your entire settlement will be taken. The result depends on the amount owed, whether a valid lien or judgment applies, and the facts of your case.
Your lawyer cannot simply ignore a valid child support claim against the settlement. Before distributing your money, the legal team may need to confirm the amount owed, communicate with the child support agency, and arrange for the required payment from the settlement proceeds.
Child Support Liens in Alabama
The Alabama Department of Human Resources can place a lien on a delinquent parent’s real or personal property when the case meets the state’s requirements. Under Alabama’s administrative rules, the parent generally must owe at least $1,000, including interest, and the total arrears must equal at least three months of current support before the agency administratively files a lien.
Once a valid lien reaches settlement proceeds and the parties responsible for distributing the money receive notice, the lien generally must be addressed before the client receives the balance. The parent must be notified and has an opportunity to contest the lien. Alabama’s child-support lien rules and Alabama DHR’s guide explain these enforcement requirements.
Child Support Liens in Mississippi
In Mississippi, unpaid child support installments become enforceable judgments. Once properly enrolled, a child support judgment operates as a lien against the debtor’s real and personal property and may be enforced like other judgments. That can affect the distribution of personal injury proceeds when an enforceable child support claim attaches to the recovery. Mississippi Code § 93-11-71 describes how these judgments and liens operate.
The Mississippi Department of Human Services also maintains a process for reporting personal injury claims to its Division of Child Support Enforcement. The agency may learn about a recovery through claim reporting, information supplied by an insurer or attorney, court records, or information from a parent involved in the child support case.
How Is the Child Support Lien Paid?
A child support lien does not normally result in the client receiving the settlement and paying the agency later. Instead, the settlement funds are first deposited into the attorney’s trust account. After the lien amount is confirmed, the required amount is paid from the settlement, along with any other valid liens, case expenses, and attorney’s fees. The client then receives the remaining balance.
Child support and lien issues are highly dependent on the particular order, payment history, and enforcement action. If you believe you owe child support, tell your personal injury lawyer early so the issue can be investigated before it delays your settlement check.
Paying Your Legal Fees
The Andy Citrin Injury Attorneys team, like most personal injury lawyers, charges a contingency fee. That means that you will pay our law firm a percentage of your settlement, but owe us nothing if we do not recover money on your behalf.
In addition to the attorney’s fee, you will typically reimburse your lawyer for other costs associated with your case. Getting a personal injury claim ready for trial requires a lot of evidence, time, and money. Your lawyer might need to hire expert witnesses, copy your medical records, and pay filing fees. Our law firm typically advances all these costs, and you only reimburse us if we win or settle your case.
Make sure to ask your attorneys up front how they will be compensated. Andy Citrin Injury Attorneys will work openly and honestly with you from day one to ensure fair compensation for you and your legal team.
Getting You a Settlement Check
Our goal is to get you as much money as possible. Once we’ve negotiated with lienholders and resolved our attorney’s fees, Andy Citrin Injury Attorneys will promptly issue you a check for all the remaining money.
We’re proud of our winning reputation, and our lawyers always have our clients’ best interests in mind. If you would like to hear more about their success stories, please visit our Client Stories or Settlements and Verdicts pages.
Will I Have to Pay Taxes on My Personal Injury Settlement?
Most of your personal injury settlement or jury award will be taxable. However, there are exceptions to this rule. For example, if a jury awards you punitive damages, you will have to pay taxes on this amount.
The complexities of tax laws and loopholes can be daunting, which is another reason to work with an experienced attorney who can support you through the process. Our team can educate you about your obligations and connect you with a skilled tax professional (if needed).
RELATED: What Is a Free Consultation With a Personal Injury Attorney?
Do I Really Need a Lawyer to Settle My Personal Injury Claim?
You do not need to hire an injury attorney, but it’s probably in your best interest. Our lawyers have spent decades fighting for the injured in Alabama and Mississippi, so we know how much your case is really worth.
It’s difficult for most people to understand how much their personal injury case is worth, let alone negotiate with lienholders. When you work with an attorney, they will:
- Calculate a lifetime’s worth of lost wages and wage-earning capacity
- Consult with doctors and other experts about your long-term medical needs and care plan
- Identify all the insurance policies that might cover your personal injury claim
- Document the extent of you and your family’s pain and suffering
- Evaluate the availability of punitive damages
We believe that our track record speaks for itself. To date, we’ve recovered more than half a billion dollars for our clients. If you’d like to learn more about your personal injury claim’s value, schedule a free consultation today.
Andy Citrin Injury Attorneys: Get Paid the Settlement You Deserve
If you’re considering a personal injury lawsuit in Mobile, AL, look to Andy Citrin Injury Attorneys for help. We will help you navigate the complicated landscape of payouts, liens, and taxes. Our experienced team of legal professionals is here to answer any questions you might have about how your payout will be awarded.
To schedule a free consultation with our personal injury law firm, call 251-888-8888 or complete our online form. We will listen to your story, review your case, and help you decide what you should do. Each situation is unique, so give us a call and find out how we can help you.
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.
