Personal injury cases can be slow and take many twists and turns, but because your personal injury lawyer Bronx built a strong case, you’ve reached a settlement with the defendant. While you are understandably eager to put the case behind you and receive the settlement check, as with many aspects of law, there’s a process to follow.
How the Settlement Process Works in a Personal Injury Claim
Negotiating a personal injury settlement can involve some back and forth on the part of you (the plaintiff) and the defendant (usually an insurance company). This process allows you to avoid a drawn-out and expensive courtroom trial.
Generally, the settlement process involves these simple steps:
- You send a demand letter to the insurance company, asking for your ideal settlement figure. This number may be a bit high, but it leaves you room to negotiate.
- The insurance adjuster responds with any factors that would decrease the amount you stand to receive, such as questions about liability, or certain unnecessary medical costs.
- You respond to these arguments as best as you are able to with supporting information and documentation.
- The insurance adjuster makes a lower counteroffer, typically as a way to feel out how big of a hurry you are in to get through the settlement negotiation process.
- You factor the adjuster’s arguments into your own research and then make another counteroffer that is a little lower than the initial offer you sent with your demand letter.
- You continue the back-and-forth negotiations until you arrive at an agreement.
- If you do not reach an agreement, your claim goes to trial.
Tips for successful negotiation
The steps you take during the settlement negotiation process can play a big role in making the process go smoothly. Here are a few basic tips that can help you find greater success in your negotiations:
- Stay organized: Make sure you constantly take notes during all your discussions with the insurance adjuster, and keep copies of all correspondence you send and receive. If you are requested to provide the adjuster with certain information, make sure to do it as quickly as possible.
- Be patient: Do not try to hurry through the negotiation process—doing so could mean you do not end up with as much compensation as you could receive by waiting out the process and making counteroffers.
- Keep fighting: Persistence is key to a successful settlement negotiation. Do not let the adjuster let your case fall to the bottom of the pile. Make sure they stick to the established timeline, and feel free to regularly check in about the status of your case. Staying in your adjuster’s world keeps the case fresh in their mind and ensures a quicker resolution.
- Be polite: Remain calm and straightforward at all times, and be polite and pleasant to deal with. Adjusters are much more likely to agree to a favorable deal if they enjoy talking and working with you.
NY Personal Injury Settlements and Taxes
A personal injury accident can significantly impact your ability to earn a living. Fortunately, by filing a claim, you can seek compensation to cover medical expenses, lost wages and other damages.
As tax season approaches, you may be wondering if your personal injury settlement is taxable — will you have to pay the government a portion of the money you recovered for medical expenses, lost wages, pain and suffering and other damages? While physical injuries are not taxable, certain aspects of your settlement may be subject to tax laws.
Damages from injury or illness
Typically, money obtained from a personal injury settlement is not taxable under federal or state law. Regardless of whether you settled your case in or out of court, or a had lengthy trial and won, the proceeds you receive from a settlement for a physical injury or illness are excluded from tax laws.
This means that damages such as medical bills, lost wages, emotional distress, loss of consortium, pain and suffering and attorney fees are not taxable, so long as you suffer a physical injury or illness.
Punitive damages
In certain cases, punitive damages may be issued in addition to compensation from a civil claim. Punitive damages are always taxable and, unlike compensatory damages, are intended to punish the defendant rather than reward you. If your case involves punitive damages, your personal injury lawyer Bronx can ask the judge to separate compensatory damages which are not taxable from punitive damages. Always remember to include this compensation on your income tax return to avoid any issues with the IRS.
How interest is taxed
If you receive a large settlement from a personal injury claim and you let the money sit in an account, the accrued interest is taxable. Additionally, if your case is pending too long, you may receive interest on the judgement. Any interest you accrue under these circumstances is also taxable.
Stages of NY Personal Injury Settlement
- The Settlement and Release Form
Once you reach an agreement with the defendant, you’ll be asked to sign a settlement and release form. It is a contract that states terms of the settlement and releases the defendant from the immediate claim and any future claims relevant to your case. If the defendant breaches the contract by not fulfilling the settlement terms, you can go back to court and ask that they be enforced.
- Insurance Company Processes the Claim
Once the settlement and release form is signed by both parties, the defendant’s insurance company processes the claim and issues a check to your personal injury lawyer.
- The Escrow Account and Liens
Your lawyer will deposit the check into an escrow account, also called a trust, which is a temporary repository at a bank. Before you or your attorney receive payment, all outstanding bills must be paid, including liens that have been filed.
What is a lien? Let’s say you slipped and fell in a parking lot and broke your hip. Your insurance covered some, but not, all of your medical expenses. The doctors, hospital and rehabilitation facility, notified of your personal injury lawsuit, paid the remainder and filed a lien against your settlement. A portion of your settlement is used to repay them.
- Paying the Lawyer
When you hired your attorney, you signed an agreement on how he or she would be paid. Many personal injury attorneys work on a contingency basis, which means that if they are successful, they receive a percentage (usually 33%) of the settlement. If they do not win the case, they do not get paid. Other attorneys charge an hourly rate. Either way, you are still responsible for paying the expenses accrued during the case – for example, court costs and administrative fees.
- Your Settlement Check
Once the liens are settled and your lawyer accounts for his or her payment and expenses, you will receive your settlement check. It typically takes about six weeks from the signing of the release to receive your payment, but if the insurance company is slow or there are multiple liens against your settlement, it can take longer.
Trust an Experienced, Compassionate Advocate
Evan W. Kohn has more than 30 years of legal experience and tenaciously will pursue the damages you deserve. Se habla español. To learn more and schedule a free consultation, contact our office today or call us at (718) 409-5500.