How a Lien Can Affect Your Personal Injury Settlement?

If you’ve been injured in an accident, the last thing you want is a draining legal battle. But if a lien has been filed against your settlement funds, there’s a chance that a judge may not award the full amount owed to you. If this happens, you might want to check these guys out for legal advice.

In general, the smaller the settlement, the more you have to pay in out-of-pocket expenses. So filing a motion to fight the lien might be a wise course of action, especially if you have significant bills that haven’t been addressed yet.

What Is a Settlement Lien?

The reasoning behind a settlement lien is simple. It ensures the creditor gets a portion of the award even if the debtor files bankruptcy and is unable to pay. Just like any other legal document, there are stipulations associated with settlement liens. For example, some require defendants to have contingency fee agreements or otherwise be paid upfront.

When you are agreeing to settle a case, the process is much like filing bankruptcy. That means you need to negotiate the terms carefully before agreeing to anything. The goal is to protect your interests while leaving the possibility for the defendant to get paid if your financial situation changes for the worse.

How Do Liens Work?

A lien is a right against property that ensures a creditor’s acceptance of what might otherwise be an insolvent debtor’s true value. In other words, it is a legal document that protects a creditor’s interest. 

It’s important to note that the lien may be filed against your settlement before, during, or after the trial. And the defendant may choose to pay a portion of your settlement money to the third party to prevent them from taking legal action. That’s because the party that filed the lien will have a right to sue if their claims haven’t been settled appropriately. For most people, a settlement lien translates to going back to court after resolving your personal injury case.

How Can it Affect My Personal Injury Settlement?

A lien can affect your personal injury settlement in many ways. For example, if the defendant owes the plaintiff a debt for medical expenses, a lien allows the plaintiff to take priority over the defense’s claim. Also, if a creditor has filed a lien against a person and the debt was incurred prior to the car accident, the creditor will have priority over the other party’s claim.

However, the defendant might be able to get around the lien if they have an indemnity agreement with their insurance company. In this agreement, the defendant would not have to pay their medical bills because the insurance company would take care of them. This also means you will not be able to attach a lien to the settlement. 

How Can You Combat a Lien?

If you have significant bills that haven’t been addressed yet, challenging the lien is worth a shot. You can use a motion to set aside the lien to have your settlement money released and sent directly to you. 

If you know that the case has been settled but you’re not able to access your settlement money due to a lienholder, there are a few things you can do. 

The first is to file a motion to set aside the lien. This motion states that there are things that need to be addressed before the lien holder can take any settlement money from you. These include costs not yet incurred or property which hasn’t been fully compensated. 

The second thing you can do is to disallow the filing of a lien. This motion makes the lien holder prove that they have an enforceable lien against your settlement money.

Lastly, you can disallow interest on the claim. This motion states that a lienholder has no right to demand any additional amounts over the actual value of the claim. However, this will be a gamble because the lienholder may choose not to settle if they know you are disallowing interest in the claim.

Everything considered, it’s important to have a plan for the worst-case scenario for your settlement money. One should even consider negotiating with the defendant and file motions for lien holders if necessary.