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Receiving a settlement check is a major relief after a long lawsuit process. Whether it’s for a personal injury claim, workers’ compensation, or an insurance payout, this money can help cover medical expenses, lost wages, and daily living costs. However, once you deposit your check, you may find that your funds are not immediately available, which can be frustrating.
Banks often place a hold on large checks, including settlements, to verify funds, prevent fraud, and ensure the check clears. These precautions protect both the bank and the customer. Nonetheless, they can also delay access to funds when plaintiffs need money urgently. In this post, we will explore why banks place holds, how long they last, and ways to speed up the process. With this, you can manage your financial situation better.
Why Do Banks Hold Settlement Checks?
Banks place holds on large checks, including lawsuit settlements, for several reasons. These include:
- Fraud Prevention – The primary reason why banks hold settlement checks is to prevent fraud. This allows the financial institution to verify large checks and ensure that they are legitimate and not counterfeit.
- Check Clearance – Also, the bank must confirm with the issuing institution that the check will be honored, especially if it’s from an out-of-state bank or an insurance company.
- Legal Requirements – Legal regulations also allow banks to place a temporary hold on checks to prevent issues with checks bouncing.
- Large Transaction Reviews – Since settlement checks often involve high-dollar amounts, financial institutions take extra precautions to review large transactions before making the funds available.
Though these measures and policies help protect account holders. However, they can also create delays in accessing money, especially for plaintiffs who need immediate financial assistance for medical bills, rent, or other expenses.
How Long Do Banks Hold Settlement Checks?
Hold times for settlement checks vary, but most banks follow a general timeline. Typically, large settlement checks are held for three to seven business days before funds are fully available. If the check is from an out-of-state bank or an insurance company, it could take up to ten business days to clear.
In some cases, banks release a portion of the money, usually the first $5,000, before holding the remaining balance for verification. However, if a check requires additional verification or fraud review, the bank may extend the hold period to up to fifteen business days.
Factors That Affect How Long Your Settlement Check Is Held
Several factors influence how long your bank will hold your settlement funds. These include:
Check Amount and Issuing Institution
One of the biggest factors is the check amount. Larger checks typically have longer hold periods due to additional verification steps. If the check is issued by a well-known financial institution, it may clear faster than one from a smaller or lesser-known entity.
Bank Policies
Another factor that affects how long your bank will hold your settlement funds is the bank policies. Essentially, different financial institutions have varying rules for processing large checks. Some banks allow partial fund availability before full clearance, while others enforce strict verification timelines.
Account History
Additionally, if you have a long-standing account with the bank and a history of regular deposits, your check might clear faster than if you’re depositing into a new account with a limited transaction history.
Deposit Method
The deposit method also plays a role. In-person deposits at a bank branch typically process faster than mobile deposits or ATM deposits, which require extra verification. Wire transfers and direct deposits clear much quicker than physical checks since they are processed electronically without the need for manual review.
How to Speed Up Settlement Check Availability
If you’re waiting for a settlement check to clear and need access to your funds faster, there are a few strategies you can try.
Choose Direct Deposit Instead of a Paper Check
Opting for direct deposit instead of a paper check can significantly reduce wait times. Direct deposits typically clear instantly or within 24 hours, whereas physical checks can take several days.
Talk to Your Bank about Early Release of Funds
Another option is to speak with your bank about early fund release. Some banks allow partial access to funds before the full check clears, especially if you have a strong account history and regular transactions.
Request a Certified or Wire Transfer Settlement Payment
If possible, you can also request a wire transfer or certified check instead of a regular check. Wire transfers clear faster and don’t require extended holds like paper checks. If your settlement is coming from an insurance company or legal firm, ask if this option is available.
Consider Pre-Settlement or Post-Settlement Lawsuit Loans
If you’re struggling financially while waiting for your check to clear, lawsuit loans can provide financial relief while waiting for your settlement check to clear. The pre-settlement funding is risk-free and non-recourse. This means that you only repay if you win your case. As such, pre-settlement or post-settlement lawsuit loans are a great alternative while you wait for your settlement check to clear.
What to Do If Your Settlement Check Is Delayed?
If your bank is holding your funds longer than expected, the first step is to contact them and ask for an explanation. Sometimes, a delay occurs due to additional fraud reviews, incorrect banking details, or pending clearance from the issuing institution.
It may also be helpful to contact the payer—whether it’s an insurance company or a legal firm—to verify that the check was processed correctly and hasn’t been flagged for review.
If the delay persists, your attorney may be able to provide official confirmation of your settlement to help speed up the release process. Some banks request formal legal documentation to approve high-value check deposits. Therefore, having your lawyer intervene could resolve the issue.
For those who urgently need money, lawsuit loans can be a practical solution while waiting for check clearance. Once approved, you will be able to pick up your funds in as little as 24 to 48 hours, and sometimes on the same day.
Apply for a Lawsuit Loan While Waiting for Your Settlement Check
Waiting for a settlement check to clear can be frustrating, especially when you need the funds immediately. Most checks take between three to seven business days to clear, but larger amounts or checks from out-of-state institutions can take up to ten business days or more.
Contact us today at High Rise Financial to apply for a risk-free lawsuit loan while you wait for your settlement check to clear. Our dedicated representatives will be happy to speak with you and educate you about your possible options. Call (866) 407-6404 today to apply.