If you've recently negotiated a settlement with a company or individual, or if you've won a personal injury case in civil court, you may have a few questions related to the financial aspect of the process. Below are the answers to three common financial questions that many personal injury clients have for their attorneys.
1. How Long After the Lawsuit Until I Receive My Settlement?
The answer to this question will depend on who is paying the settlement, and how much you've settled for.
For example, if you were involved in an auto accident with an insured motorist and you and your attorney have reached a favorable settlement amount with the other motorist's insurance company, you could receive your payment within a 30-day period following the settlement (and after all paperwork has been filed). If, however, you were in an auto accident with an uninsured motorist and you bring them to court and win, their ability or willingness to pay will have a huge impact on when (or whether) you'll receive payments.
2. What Happens if the Defendant Cannot Pay the Amount Owed to Me?
To continue the example mentioned above, if you get into an auto accident with an uninsured motorist and they cannot pay the settlement amount, what happens?
If the individual who owes you claims they cannot afford to pay the settlement, your attorney can perform a discovery. This gives them an insider look into the individual's financial situation and can help to discover assets they may be hiding to avoid paying you. If nothing is discovered, however, you may be able to garnish the individual's wages or their bank account. Unfortunately, it can be difficult to collect from someone without much in the way of assets or income, so while your attorney will try to collect your settlement the best they can, there may not be much they can do.
3. Is My Settlement Considered Taxable Income?
The clear-cut answer is, any compensation for physical injury or illness is non-taxable, but compensation in the form of punitive damages, which is legal punishment in the form of payment, is taxable. Interest on the judgement is also taxable.
Unfortunately, the rules can become a bit murky and it's best to work with a financial professional when filing taxes for the year that you received your settlement. There are exceptions to the answers above. For example, if you receive compensation for emotional distress in addition to physical compensation, your settlement is non-taxable. However, if you receive compensation for emotional distress but there's no physical aspect to the lawsuit, the settlement is considered taxable.
The answers above do not constitute legal advice. To learn more about the specifics of your case, consult with your personal injury lawyer.
For a personal injury lawyer, contact a law firm such as Sarkisian, Sarkisian & Associates PC.Share