An auto accident settlement may occur when the parties involved in a car accident agree on a payment amount to cover costs of injuries and property damage. This may be done before trial in a pre-trial settlement, or it can also happen during the middle of trial.
A pretrial settlement occurs when the parties in a lawsuit come to an agreement before trial, in order to work out payment for injuries and damages. Instead of taking the case to court and going through the entirety of the trial process, the parties attempt to negotiate and come to terms on the payment. This can occur out of court, sometimes with a mediator present during negotiations.
Essentially, auto accident settlements are a contract which states that the liable party will pay the victim a certain amount of money. This is paid out in order to make up for the losses they caused. Settlements are generally looked upon favorably due to the fact that they tend to save the parties time and money. Instead of spending several weeks or months dealing with court, the parties can agree on a settlement and move on with their lives. Of course, the parties involved must be willing to work with one another in a cooperative way in order for a settlement to work out.
What Are Auto Accident Settlement Payouts? What if the Other Party Will Not Pay the Settlement Amounts?
Generally speaking, auto accident settlements are distributed in two ways. One is through a structured settlement, in which the payments are made in regular installments over time. A structured settlement helps the plaintiff to avoid the tax consequences associated with receiving large amounts of money at once. Structured settlements are sometimes referred to as “annuity payment” plans.
Alternatively, an auto accident settlement payout happens when the plaintiff receives the money all at once in a lump sum payment. This is also known as a settlement cash payout. A settlement cash payout allows the person to receive the money that they are entitled to without waiting. However, as briefly mentioned, there can be major tax disadvantages to receiving a large sum of money all at once.
One of the biggest disadvantages to annuity or structured settlement plans is that the paying party may choose to stop making payments in the future. This can be due to them going bankrupt, or simply refusing to pay, although such contracts are legally binding. Because of this, some people choose to have an auto accident settlement payout in order to ensure that they do not have any problems in the future in terms of receiving what is owed to them. The large tax consequences may be worth it, depending on the circumstances.
If the defendant is unable to make the entire lump sum payment, the court may sometimes take other measures in order to ensure that the amount is paid. An example of this would be how the court may place a lien on the person’s property and sell it, in order to meet the payment amounts.
What Points Should I Cover in Order to Obtain a Favorable Settlement?
It is important to have a basic understanding of the goal of a settlement. The purpose of a settlement is to avoid trial whenever possible. This is done by an agreement that the plaintiff will forgo rights to pursue trial in exchange for a sum of money, or performance of an action by the defendant. An example of performance would be agreeing to provide a mechanic.
As such, it is necessary for both parties to know exactly what they want to obtain before entering into the settlement negotiation. Generally speaking, settlements always require a lawyer and/or a mediator. When consulting with your attorney regarding the settlement, you should discuss the following points:
- Your chances at trial, and whether a lawsuit is really necessary;
- The amount that you think your case is worth in terms of dollar amounts;
- Discuss the minimum amount that you will accept or pay in order to reach a settlement (do not disclose this information to the other party until necessary);
- Outcomes and settlement amounts from similar previous cases;
- The strengths and weaknesses of the evidence for both the opponent’s case, as well as your own case;
- The amount of insurance coverage and monetary resources available to the opposite party;
- The effect of any settlement payments on related matters, such as attorney’s fees and tax consequences; and
- If you are the plaintiff in the accident, consider whether remedies other than monetary payment are necessary.
What Else Should I Know About Auto Accident Settlement Payouts?
Settling an auto accident without going to trial can provide a number of advantages. Some examples of the biggest advantages include:
- Less Expensive: Going to trial can be expensive for both parties, due to the fact that most attorneys are paid by the hour for going to trial. There are other fees to consider, such as court costs, that are avoided by settling outside of court;
- Less Stressful: Although most court trials do not last more than a few days, the process can be stressful for both parties. With a pre-trial settlement, there would be no need for cross-examination, expert witness testimony, and other necessary steps that draw out the trial process. Additionally, a settlement avoids appearing in court altogether which can be nerve-wracking on its own;
- Awarded Damages are Unpredictable: When you go to trial, the jury awards the damages and there is no negotiation option for either party. Occasionally, the plaintiff may be awarded a lesser amount at jury trial than what they would have been awarded at a pre-trial settlement. It may be in the plaintiff’s best interest to have fewer people involved when determining how much of an award they are to receive;
- Less Time Spent on Appeals: If the defendant decides to appeal the outcome of the case, it may take more than a year for the entire process to be complete. Appeals are not generally allowed in a settlement; and
- Increased Privacy: Settlements are private, whereas court trials are not. The details of a court trial are public record. Parties interested in maintaining a higher level of privacy should opt for a settlement as opposed to going to trial.
When the plaintiff can receive their award depends on when the settlement agreement has been reached. After the pre-trial settlement agreement has been agreed upon, payments are generally paid out within 20 or 30 days. Usually, the settlement agreement will state the time frame in which the defendant must pay the agreed upon amount. The settlement agreement may also clarify whether the plaintiff can add interest to the original amount owed, if the defendant does not pay within the time period stated in the agreement.
Do I Need an Attorney for Auto Accident Settlement Payouts?
In nearly all settlement endeavors, you will need a lawyer present to help you negotiate your position. Additionally, the choice of whether to select a payout vs. annuities can sometimes be a difficult one to make. You should consult with a local car accident lawyer if you need legal advice regarding auto accident settlement payouts. A local attorney will be most aware of what laws your state has that could affect the outcome of your case, as the laws governing settlements can be very different from state to state.
A skilled and knowledgeable attorney can assist you in court and out of court, and help ensure that your legal rights are fully protected and represented. An attorney can also ensure that you are well-prepared when entering the settlement, and the settlement concludes with a favorable agreement. Should settlement attempts fail, an experienced and local attorney can also represent you in court, as needed.