What Are Residual Funds?
Residual funds are what's left in a settlement after the first round of payments. The agreement decides where that money goes.
Residual funds are the money remaining in a settlement fund after all approved claims, fees and costs have been paid, including amounts from checks that were never cashed. The settlement agreement determines what happens to them.
Why it matters when you file a claim
If you file a valid claim, residual funds can sometimes mean a second, smaller payment later. If you don't, money you could have claimed may end up elsewhere. Either way, residual funds are why cashing your check promptly matters: uncashed checks are a major source of leftover money.
Where residual funds can go
- ✓Second distribution: paid out to claimants who cashed their first payment, if the amount justifies the cost.
- ✓Cy pres: given to a related nonprofit with the court's approval.
- ✓Reversion: returned to the defendant, if the agreement allows it.
- ✓Government: in some states, law directs certain residuals to specific funds.
A simple example
A settlement sends out its first round of payments. After the check-cashing window closes, a meaningful amount remains. The administrator reports to the court, and the court approves a second distribution to everyone who cashed their first payment, with any final small remainder going to a cy pres recipient.
Why residuals happen
Even well-run settlements end up with leftovers. Some payments bounce because addresses or email accounts are out of date. Some checks are never cashed, and some electronic payments fail. Small rounding differences add up across many claimants. Administrators usually try to reissue failed payments before treating the money as residual. Keeping your contact details current with the administrator, and cashing or depositing your payment promptly, helps make sure your share reaches you. If you move after filing, update your address on the settlement website or by contacting the administrator, and watch your inbox for messages about reissued payments.
How it relates to other terms
Residual funds feed the secondary distribution and cy pres awards. Learn more about the big picture in what happens to unclaimed settlement money.
SettleScout helps you claim on time so you're in line for both the first payment and any later redistribution. Add your brands to see your matches.
Frequently Asked Questions
Will I get a second payment from residual funds?
Possibly, if the agreement provides for redistribution and there is enough left to make it worthwhile. It is not guaranteed.
Do I have to file again for a second distribution?
Usually not. Second distributions typically go automatically to claimants who received and cashed their first payment.
Can residual funds go back to the company?
Only if the settlement agreement allows it. Many settlements prohibit reversion, and courts examine it closely.
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