In most cases, banks will not hold settlement checks for more than five to seven working days.
In most cases, settlement checks are made payable to you and a third party – your attorney – meaning that all deductions will be made by your lawyer before you receive the remainder of your settlement.
How long do banks hold settlement checks, then?
How Long Is the Bank Likely to Hold my Settlement Check?
In the optimum scenario, the insurer will send payment as soon as they receive confirmation you are agreeing to a settlement. Once your attorney makes all deductions and you pay the remainder of your settlement into the bank, the bank can hold this check for up to seven days.
You could expedite the process by giving your bank details to your attorney. The funds can then be remitted by BACS (direct transfer).
How to Cash in Your Settlement Check with Your Bank
You can cash in 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 immediately.
The Check Cashing Process
The bank typically requests two forms of ID for the cashing of a large check. The teller could also call the issuing bank, verifying the legitimacy of the check. 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 briefer hold on funds.
The issuing bank will usually request two forms of ID – a passport and 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 with no 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 of over $5,000.
While a check-cashing store may yield money immediately, fees are normally high, usually a percentage of the amount cashed in. The advantage, though, is that you will get money in your hand the same day rather than waiting for a week or more.
How Long Will it Take to Get My Settlement Check?
Waiting for a personal 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 are 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 a 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. As well as 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.
- 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 off work sick or on vacation, and incorrectly signed documentation, in addition to straightforward inefficiency or human error.
- Your attorney deposits the check in a trust account: Your attorney is obliged to deposit the settlement check into the trust account or escrow account of the law firm. This can add a week or more to the overall time frame as the check is cleared by the issuing bank. Check clearing takes up to seven days.
- Lienholders and creditors are paid: Your attorney will negotiate your liens and make outstanding payments for medical bills, health insurance, and Medicare/Medicaid if appropriate. Any outstanding child support payments will also be made. This phase of proceedings can be time-consuming.
- Your attorney deducts legal fees and legal costs from the settlement: Your attorney will now deduct agreed legal fees, as well as any legal costs like court filing fees and depositions. Your attorney then mails your settlement check with 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 was a severe injury requiring ongoing medical care, or when the case involves a minor.
The insurer will usually set up an annuity so you are paid out on a fixed schedule.
You should carefully review the terms of all potential structured settlements with your attorney to avoid any unnecessary delays.
How Can I Streamline the Delivery of My Settlement Check?
There are some simple methods you can employ to speed up the delivery of your settlement check.
When you are approaching a settlement agreement, start working on a release form draft ahead of time.
Next, liaise with your attorney to calculate your liens and bills. You can do this while the insurer is processing the release form.
Always respond to all requests from your lawyer in a timely fashion 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 expenses 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 pay the principal in addition to 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.