How Long Will the Bank Hold My Settlement Check?

Settlement Check Holding Periods Explained

When you receive a settlement check, you might wonder how long it’ll be before you can access those funds. Generally speaking, the bank may place a hold on checks for five business days to confirm their legitimacy, though the length can vary based on the bank’s policies and the check amount itself.

This hold is meant to protect both you and the bank from potential fraud. In some situations, larger checks might have an extended holding period. It’s important to understand your bank’s policies to avoid any unexpected delays when accessing your funds. Read on to learn more about the steps after settlement of your case.

How Long Is the Bank Likely to Hold My Settlement Check?

In the best-case scenario, the insurer will often send payment as soon as they receive confirmation that you agree to the settlement. Once your attorney makes all deductions and you deposit the remainder of your settlement into the bank, the bank can hold this check for up to seven days.

You can expedite the process by providing your bank details to your attorney. The funds can then be remitted by direct transfer.

How to Cash Your Settlement Check at Your Bank

You can cash a personal injury settlement check at your own bank.

In many cases, especially with larger settlements, you may not be able to access the full amount instantly. The bank can hold funds:

• For two business days (checks against accounts at the same institution).
• For seven business days (checks against accounts at other institutions).

Banks can also hold funds for longer if there are reasonable grounds.

If your existing bank balance is greater than or equal to the check amount, it is possible your bank may cash the settlement check as soon as the same day.

The Check-Cashing Process

The bank typically requests two forms of ID to cash a large check. The teller could also call the issuing bank to verify the check’s legitimacy. The teller may also ask you about the source of the check. This is routine bank procedure and no cause for concern.

You should then receive your cash. Some banks will charge a nominal check-cashing fee.

Cashing a Settlement Check with the Issuing Bank

The swiftest route to your funds is to cash the check with the issuing institution. This will almost always lead to a shorter hold on funds.

The issuing bank will usually request two forms of ID—a passport and a driver’s license, for example.

Some banks charge a flat fee for cashing checks, while others charge a percentage of the total check amount. You may even find there is no fee for cashing a check at some banks.

Cashing a Settlement Check Without a Bank Account

For those without a bank account or those looking to get money on the spot, there are options such as convenience stores, grocery stores, and check-cashing establishments. Many convenience stores and grocery stores will not cash checks over $5,000.

While a check-cashing store may yield money almost immediately, fees are normally high, usually a percentage of the amount cashed. The advantage, though, is that you will get money in your hand as soon as the same day rather than waiting a week or more.

How Long Will It Take to Get My Settlement Check?

Waiting for a settlement check to arrive can be frustrating. Once a personal injury claim settles, the check should be distributed within a month or so. The unique circumstances of each case can impact this timeline in either direction. If some of your healthcare bills were paid by Medicaid or Medicare, it can take months to receive a settlement check.

You can do your part by completing all paperwork promptly. Contact your attorney if your settlement check seems unreasonably delayed.

What Happens Before You Receive Your Settlement Check?

Although every personal injury claim is unique, there is a set process that unfolds before your settlement check arrives at your doorstep.

• Sign the release forms: Once you agree to a settlement with the insurer, you sign a release agreement form. In addition to accepting the settlement offer, you also relinquish any further legal claims regarding your accident injuries. Your attorney will send the signed release form to the insurer.
• The insurer will issue the settlement check: The insurer will process, issue, and mail your settlement check after receiving the signed release form. Hold-ups often occur at this stage for routine reasons like employees being out sick or on vacation, incorrectly signed documentation, or straightforward inefficiency and human error.
• Your attorney deposits the check in a trust account: Your attorney is required to deposit the settlement check into the law firm’s trust or escrow account. This can add a week or more to the overall time frame while the check clears the issuing bank, which can take up to seven days.
• Lien holders and creditors are paid: Your attorney will negotiate your liens and make outstanding payments for medical bills, health insurance, and Medicare/Medicaid, if applicable. Any outstanding child support payments will also be made. This phase of the process can be time-consuming.
• Your attorney deducts legal fees and costs from the settlement: Your attorney will now deduct the agreed-upon legal fees, as well as any legal costs, such as court filing fees and deposition expenses. Your attorney will then mail your settlement check for the remaining amount.

How do Structured Settlement Payments Differ?

Unlike a regular settlement, which is paid in full, a structured settlement involves smaller payments made over time. Structured settlements often occur when there is a severe injury requiring ongoing medical care, or when the case involves a minor.

The insurer will usually set up an annuity so that you are paid on a fixed schedule.

You should carefully review the terms of any potential structured settlement with your attorney to avoid unnecessary delays.

How Can I Streamline the Delivery of My Settlement Check?

There are some simple methods you can use to speed up the delivery of your settlement check.

When you are approaching a settlement agreement, start working on a draft of the release form ahead of time.

Next, work with your attorney to calculate your liens and bills. You can do this while the insurer is processing the release form.

Always respond to requests from your lawyer in a timely manner to expedite the settlement check process.

Is It Worth Considering Pre-Settlement Funding?

If the settlement check process is unfolding too slowly and you need cash now for medical or living expenses, pre-settlement funding might be beneficial.

Pre-settlement funding, commonly referred to as lawsuit loans, is a form of risk-free financing. Unlike a traditional loan, legal funding doesn’t require a credit check or proof of income. Instead, a funding company will offer you a portion of your forthcoming settlement. If you win your case, you repay the principal plus a funding fee and interest. If you lose your case, you pay nothing.

While pre-settlement funding is not the right solution for everyone, it can be useful if you experience unexpected delays in the settlement check process.