Understanding Your Settlement Options in a Personal Injury Lawsuit

You’ve been hurt. You’ve been through the process of getting the gears of the courts grinding. Now, it’s time to start thinking very realistically about how your settlement options might play out. 

Hopefully, you’ve been able to be among the brutal majority of people that are able to settle a tort before it gets to a trial: some 95 percent or more personal injury cases are settled before going full-circle. 

Many cases spell out specifically what kind of settlement is being sought. But outside of the official proceedings, there may be any number of options that a defendant will agree to that may not have been initially described in the complaint. 

Here are a few options that you need to know about for your suit. 

The Most Well-Known Settlement Options

After years of a very catchy TV-advertisement campaign, a certain law firm used shouting people or people operatically singing about structured settlements. 

These are a stream of payments from a defendant. Often these are paid out through an annuity, a specific type of insurance product. These structured settlements are very popular, totaling well over $6 billion annually in the U.S.

For obvious reasons, the stability of structured settlement is very appealing. And there is an even greater benefit most don’t know about. If there is a point where prospects improve or take a turn for the worse, you can sell structured settlement plans. 

The stability from a structured settlement is valuable because it can give financial guarantees when life has been changed to the point were income might not be feasible or easy for someone. Depending on the terms, a victim can have some security even when their world was disrupted. 

… And All At Once

The lump-sum, another common option, is just as it sounds. The defendant pays out all that they will pay out all at once. 

The upside here is that you have money in the very near term. This means that bills that have been waiting and mounting can get paid and other financial needs can find resolution sooner. Plus, with a lump-sum settlement, there is more money all-at-once to have a more potent impact on the financial aspect of life. 

On the downside, the payment might be lower in the whole when compared to what would be paid out in total through an annuity with a structured settlement. Although, the financial impact of the annuity isn’t as potent. 

And there is always the IRS’ interest in changes in personal wealth. Depending on the legalese behind the lump-sum, a goodly portion of it could be going to the taxman, especially if you already see major income or the damages paid were punitive in nature. 

Be Armed by Knowing More

There is significant texture and nuance to these very large categories of settlement options. But we’ve been able to cover the high-level ups and downs to each. Be sure to be thoughtful and consider deeply the options you have with counsel before making a decision. 

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