Reaching a settlement in a personal injury case is a major milestone. For many injury victims, it’s the moment they’ve been waiting for — the point where the insurance company has finally agreed to pay fair compensation.
But once a settlement is reached, a very common question comes up:
Does this mean I get my check right away?
In most cases, the answer is no. Even after a settlement is agreed upon, there are several important steps that must happen before settlement funds can be issued and placed into your hands. This is known as the settlement phase, and it plays a critical role in protecting your money and ensuring your case closes correctly.
What Is the Settlement Phase in a Personal Injury Case?
The settlement phase is the period of time after an agreement is reached but before the settlement funds are distributed. It includes legal documentation, receiving the check from the insurance company, depositing the funds into a protected trust account, and resolving outstanding bills or liens.
This phase exists for one main reason: to ensure everything is handled properly and legally before settlement funds are paid out.
Even when your case has resolved, there are still obligations that must be satisfied before the settlement can be finalized.
Step One: Signing the Settlement Release
The first major step in the settlement phase is signing the release.
A release is a legal document provided by the insurance company (or defense attorney) that formally ends the claim. By signing it, you are agreeing to accept the settlement funds in exchange for releasing the insurance company and the at-fault party from further liability related to the incident.
Release forms can vary widely. Some are short and simple. Others are several pages long and contain detailed legal language. Either way, it is an important document — and it should always be reviewed carefully.
This is one of the key reasons why having an attorney matters. Your lawyer will read through the release to ensure:
The terms match the settlement agreement
The language is appropriate for your case
You are not signing away rights that should remain protected
The release only applies to the correct claim and incident
Once the release is approved, you will sign it either in person or through electronic signature.
Step Two: The Insurance Company Sends the Settlement Check
After the release is signed, the insurance company can issue the settlement check. This does not happen instantly — it often takes several days for the check to be processed and delivered.
The settlement check is typically made payable to both:
The client (you), and
The law firm (in trust)
This is standard practice and ensures the funds are handled properly and securely. It also prevents mistakes, delays, or improper payments.
Step Three: Depositing the Funds into an IOLTA Trust Account
Once the settlement check arrives, it is deposited into a special account called an IOLTA account.
An IOLTA is an attorney trust account governed by the State of Utah and regulated by strict rules. These accounts are designed to protect client funds and ensure settlement money is not mixed with a law firm’s operating funds.
In other words, settlement funds must be handled carefully and ethically — and IOLTA trust accounts exist to enforce that.
After the check is deposited, it must clear the bank before any settlement funds can be distributed. This is a required step and is part of protecting your money.
Step Four: Resolving Medical Bills and Liens
One of the most important parts of the settlement phase is addressing outstanding medical bills and liens.
In many personal injury cases, medical providers treat injured clients while the case is pending. Some providers may agree to wait for payment until the settlement is resolved. In other cases, health insurance may cover some treatment, which can create reimbursement obligations.
These financial interests are often called liens, and they must be resolved before settlement funds are distributed.
This is critical for two reasons:
It ensures medical providers are paid what they are legally owed
It protects you from being pursued for unpaid bills after your case closes
Your legal team will review all medical bills, identify any liens, and resolve them according to Utah law.
Step Five: Negotiating Reductions to Help Your Settlement Go Further
Another important part of the settlement phase is working to make sure your settlement funds go as far as possible.
In many cases, this means negotiating with:
Medical providers
Health insurance companies
Lienholders
Your attorney may be able to reduce medical bills or lien amounts. These reductions can significantly increase the amount you ultimately receive.
This step is often overlooked by people who have never been through a personal injury case before, but it can make a meaningful difference in the final outcome.
Step Six: Moving Into Settlement Distribution and Accounting
Once the settlement funds have cleared and all bills and liens are resolved, the case moves into the final stage: settlement distribution and accounting.
At this point, the law firm prepares a full settlement accounting showing:
Total settlement amount
Attorney fees
Case costs
Medical bills and lien payments
Final amount distributed to the client
An appointment is then scheduled for you to come into the office and receive your settlement package and check.
This is the moment when the settlement becomes real — and when you can finally move forward knowing the case is complete.
Are Personal Injury Settlements Taxable?
Another common question injury victims ask during the settlement phase is:
Do I have to pay taxes on my settlement?
Generally speaking, personal injury settlement funds are not taxable. This is one area where federal law is often favorable to injury victims.
However, tax rules can have exceptions depending on the situation. Because of that, it is always recommended that you have your taxes prepared by a qualified tax professional in the year you receive a settlement and let them know about the settlement.
In most cases, clients do not have anything to worry about — but it’s still wise to handle it correctly.
Call McMullin Injury Law for Settlement Help
Reaching a settlement is a major step forward, but it is not the final step. The settlement phase exists to ensure the release is signed properly, funds are protected, bills and liens are handled correctly, and the final settlement distribution is accurate.
While it may take some time, this process is designed to protect you and make sure you receive your settlement the right way.
If you have questions about your case or want guidance on the settlement process, contact McMullin Injury Law for help.