Most legal disputes end in a settlement, saving money in legal and court fees and allowing people to recover compensation sooner.
Reaching a settlement can still take some time, however, which can put pressure on you if you have bills that cannot wait.
If you need funds sooner rather than later, Injury Wallet can find the best interest rate for a cash advance on your lawsuit.
Before you’re sure about getting a cash advance, you likely have many questions. For example, How are settlements paid out?
How Can You Choose to Receive Your Settlement?
When you settle a legal claim, you often have a choice between two options to receive your funds: a lump sum payment and a structured settlement payout.
Each has benefits and drawbacks, and your lawyer can help advise you which would work best for you.
A lump sum settlement is just what it sounds like—you receive your entire settlement in a lump sum. This can work well if you have many bills that need to be paid immediately and your settlement is entirely or mostly tax-exempt.
A structured settlement is paid out periodically over months or years. Structured settlements work well if you want your money to come in over time, like income.
Regular payments over time can be especially beneficial if you know you’re the type of person who will want to spend your funds as soon as possible.
How Long Does It Take to Get Paid After a Settlement?
Once you officially settle, receiving your funds can take a few days to a couple of months. Your settlement agreement likely sets a deadline, which you can generally rely on to predict when to expect your check.
Usually, the check is sent to your lawyer, who takes their fee and dispurses any money to creditors before sending you the remainder.
Are Lawsuit Settlements Taxable?
Like many things in the legal world, whether your settlement is taxable depends. Specifically, whether some or all of your settlement is taxable depends on the type of legal claim and what the funds represent.
As the IRS explains, personal injury or physical sickness settlements are generally not taxable. This tax-exempt status extends to any compensation related to a physical injury, even in cases based on other legal claims.
For example, if you have a personal injury case, you might agree that a portion of your settlement represents pain and suffering damages.
Because it’s part of a personal injury claim, even the part that doesn’t directly compensate you for the injury is tax-exempt.
However, if you sue for wrongful termination, you might agree that part of the settlement represents pain and suffering damages.
That amount will be taxable unless the pain and suffering resulted from or in physical injury or sickness.
If you’re unsure what portion of your settlement, if any, is taxable, you should ask your attorney for more information.
What Can You Do If You Need Cash Now?
Waiting for your settlement funds to come in can be extremely stressful if you have expenses and bills that need to be paid now.
Fill out our brief questionnaire today to get money in your hands in a matter of days.