Chris Hammons | December 16, 2024 | Personal Injury
Agreeing on the value of your personal injury claim is an important first step—but it’s not the final one. With a cooperative defendant, the process of receiving your settlement is typically straightforward. However, if the defendant is uncooperative or deceptive, it can become significantly more challenging. Below, we outline how accident settlements are paid out and the key factors to consider.
The Statute of Limitations: Your Ultimate Deadline
In Oklahoma, most personal injury claims are subject to a two-year statute of limitations, though exceptions may apply. If you don’t file a lawsuit or finalize a settlement within two years of your accident, your claim will likely be dismissed entirely.
Failing to act within this timeframe not only ends your ability to sue but also eliminates any leverage in settlement negotiations. Defendants have no incentive to negotiate if you can no longer enforce your claim in court, leaving you without bargaining power and rendering your claim effectively worthless.
Drafting and Signing a Settlement and Release Agreement
To finalize a settlement, you must draft and sign a settlement and release agreement. This document typically requires you to permanently relinquish your claim in exchange for a specified payment. The agreement may also include additional terms depending on the specifics of your case. Once both parties sign, the agreement becomes a legally binding contract.
Disbursement of Funds
Once a settlement is reached, a large insurance company may take a couple of weeks to release the funds. When disbursed, the funds are sent directly to your attorney, who is ethically required to deposit them into a designated client trust account. From there, applicable deductions are made before you receive your portion of the settlement.
The following deductions frequently come out of a personal injury settlement:
- Your lawyer’s contingency fee: Your lawyer is likely to charge you a contingency fee of 30% to 40% of whatever amount they manage to settle your claim for. That might sound like a lot, but it’s not so much if, for example, your lawyer manages to triple the value of your claim.
- Case expenses: Your lawyer is likely to incur out-of-pocket fees, including expenses as diverse as court filing fees to expert witness fees, even if your case never goes to trial. Your lawyer will deduct this amount from your settlement.
- Medical liens: You might have lacked the ability to pay your medical treatment expenses as they came due. If so, your healthcare provider might have taken a medical lien on any future settlement. Not all settlements are subject to medical liens. If yours is, then it comes out of your settlement.
Understanding these deductions ensures you know what to expect and how your settlement will be allocated, allowing you to plan effectively for your financial recovery.
Enforcing the Agreement in Court
In the unlikely event that the defendant refuses to honor the terms of the settlement agreement that they signed, you can sue. You don’t sue for personal injury this time—you sue for breach of contract (the settlement agreement).
If the defendant still refuses to pay, the court can authorize a law enforcement officer to seize money from the defendant’s bank account or other property. It is highly unlikely that you will have to go this far to ensure payment of your settlement.
IRS Taxes
For detailed guidance on your tax obligations, consult a tax attorney. In general, the IRS does not tax personal injury damages. However, punitive damages are treated as taxable ordinary income—though these are rarely included in settlements, as defendants seldom agree to them. Additionally, the IRS may tax judgment interest as capital gains.
Contact a Personal Injury Lawyer Before It’s Too Late
Securing a settlement is only part of the goal—you need compensation that fully covers your losses. For all but the most minor claims, achieving this typically requires the expertise of an experienced personal injury lawyer.
At Laird Hammons Laird Personal Injury Lawyers, based in Oklahoma City, Oklahoma, we have recovered over $100 million for our clients. We’re prepared to advocate fiercely on your behalf. Contact us today for a free initial consultation at (405) 497-0480. We’re here to listen to your story, assess your situation, and help you explore your legal options.
We proudly serve Oklahoma County, OK and its surrounding areas:
Laird Hammons Laird Personal Injury Lawyers – OKC
1332 SW 89th St,
Oklahoma City, OK 73159
(405) 497-0480
