Financial blunders that can decimate your recovery after a major highway collision and before you hire a personal injury lawyer include delaying vehicle repairs without proper documentation and overlooking future financial losses. Others are failing to account for tax and benefit implications, taking on new debt during recovery, and mismanaging a large settlement after the case ends.
According to the CDC, every year, 1.19 million people are killed on roadways in the world, and both fatal and nonfatal crash injuries cost the world economy around $3.6 trillion a year. You can do your best to stay safe on the road by driving defensively and attentively, but unfortunately, not everyone will do as great a job as you do. Plus, all it takes is one mistake for a major highway collision to happen.
Before this happens and you need a personal injury lawyer, you should be aware of the top five financial blunders that can ruin your recovery.
1. Delaying Vehicle Repairs Without Proper Documentation
Delaying repairs after a major highway collision can create unexpected financial complications. Yes, you should avoid repairing your vehicle before the insurance company has inspected it, but waiting too long can:
- Increase storage fees
- Reduce your car’s value
- Make it harder to prove the extent of the damage
You should always take detailed photos immediately after the crash and keep copies of repair estimates. You should also save every receipt related to towing, storage, rental cars, and repairs.
If your car’s declared a total loss, research comparable local vehicle values before accepting the insurer’s valuation. They’re prone to insurance settlement tactics, such as a recorded statement trap, so don’t fall for them.
2. Overlooking Future Financial Losses
A serious highway collision can have financial consequences, and more than you think. Most people focus only on the immediate out-of-pocket medical expenses and vehicle damage, but there are potential future expenses that may arise months or years later. The following can all significantly increase the true cost of an injury:
- Long-term rehabilitation
- Ongoing prescription costs
- Home modifications
- Reduced earning capacity
- Future medical monitoring
If you have permanent disabilities, such as those from commercial truck accident damages, then these future losses can be a substantial portion of your overall damages.
To account for these potential financial losses, consider working with financial experts, vocational specialists, or life-care planners.
3. Failing to Account for Tax and Benefit Implications
Many personal injury settlements aren’t taxable under federal law when they compensate for physical injuries, but certain portions of a recovery may have different financial consequences. These things may receive different tax treatment:
- Interest earned on a judgment
- Compensation for lost wages in some situations
- Punitive damages
Also, if you receive a large settlement, it can affect eligibility for certain income-based government assistance programs if your funds aren’t managed appropriately. So before making major financial decisions, it’s wise to consult your personal injury attorney and a qualified tax or financial professional.
4. Taking on New Debt During Recovery
Recovering from a major highway collision often creates financial pressure, and some people respond by relying heavily on credit cards, personal loans, or high-interest financing. Borrowing may sometimes be necessary, but accumulating expensive debt can quickly consume a significant portion of any eventual recovery through interest payments and fees.
Before taking on new financial obligations, you should explore alternatives, such as:
- Disability benefits
- Employer leave programs
- Temporary financial assistance
Creating a realistic short-term budget and prioritizing essential expenses can reduce unnecessary borrowing.
5. Mismanaging a Large Settlement After the Case Ends
Receiving a substantial settlement can provide much-needed relief, but without proper financial planning, you can quickly erode its value. It’s easy to overspend on major purchases and underestimate ongoing living expenses, so make sure to create a long-term financial plan before spending significant portions of the settlement.
Many people benefit from working with a certified financial planner, as they can develop an investment strategy, establish an emergency reserve, and budget for continuing expenses related to the accident.
Frequently Asked Questions (FAQs)
Is It Better To Sue or Settle?
Whether it’s better to sue or settle will depend on the strength of your case, as well as the extent of your injuries and your goals. Most personal injury claims are resolved through settlement because it provides compensation more quickly. It also avoids the uncertainty of a trial and typically costs less in legal expenses.
However, filing a lawsuit may be the better option if the insurance company refuses to offer a fair amount, disputes liability, or minimizes the seriousness of your injuries. Going to court allows both sides to present evidence before a judge or jury. Do note that the outcome is never guaranteed, though.
How Much Do Most Personal Injury Lawyers Charge?
Most personal injury lawyers work on a contingency fee basis, which means that they only get paid if they recover compensation for you. Instead of charging hourly rates or requiring large upfront retainers, the attorney receives an agreed-upon percentage of the settlement or court award.
The exact percentage varies by:
- State
- The complexity of the case
- Whether the claim settles before trial or proceeds to court
You should also ask how litigation expenses will be handled, as these may be deducted separately from the final recovery.
How To Get the Most Out of a Personal Injury Settlement?
To get the most out of a personal injury settlement, you need to build a strong and well-documented claim. Keep records of every expense related to the injury, including:
- Medical bills
- Prescription costs
- Transportation to appointments
- Any wages lost because you couldn’t work
Also, resist the temptation to accept the first settlement offer without careful review. Let your attorney negotiate after fully understanding the long-term impact of your injuries.
Have a Personal Injury Lawyer on Your Side
A major highway collision can be scary to go through, especially if you’re injured, too. But if you have a qualified personal injury lawyer on your side, then they’ll be your voice. These law professionals will make sure that you get the maximum compensation you deserve.
Get in touch with us now if you’d like to schedule a free consultation. We at Durham Law Firm have over 20 years of legal experience.
