What Is a Lien on a Personal Injury Settlement?

Posted in Accident Information on June 20, 2021

A personal injury case can involve many complicated issues, including liens. A lien is a legal claim to a portion of an injured victim’s settlement money in a personal injury case. Insurance companies, hospitals and others may have a legal claim against your injury settlement if you could not pay out of pocket for all of the expenses related to an accident in Nebraska, such as your medical costs and property repairs. Learning more about liens can allow you to protect yourself financially after receiving a settlement or judgment award.

What Is a Lien? How Do Liens Work in Personal Injury Claims?

If a lien is placed against your personal injury settlement, it means that a third party has ownership over part of the settlement or judgment award won to pay for a debt you owe. The most common example is a medical lien. If you required emergency medical care immediately after your accident and did not pay out of pocket for this care, the health care provider fronted the costs of your medical treatment. The medical provider will then have the right to place a lien against your settlement to recoup what it spent on your medical treatments.

Other common types of liens include:

  • Health insurance lien
  • Medicare or Medicaid lien
  • Workers’ compensation lien
  • Veterans benefits lien
  • Auto insurance carrier lien
  • Mechanic’s lien

With a lien against your settlement, you will have no choice but to pay the third party the debt that is owed. If you recover financial compensation through a personal injury settlement or judgment and there is a lien in place, a portion of your award will go toward fulfilling the lien before you can use the rest of the amount to pay for other injury expenses. You will also have to use part of your settlement to pay for your legal representation, if applicable.

How to Handle a Settlement Lien

If you find out that someone has placed a lien against your personal injury settlement, learn as much as you can about the lien. Keep and review all documentation you receive from the third party about the lien, including the lien notice. Learn the laws in your state regarding personal injury settlement liens to confirm if the private or public lienholder has the legal right to claim part of your settlement.

Keep in mind that a federal lien will take precedence over any other liens against your settlement. This means you will have to pay the federal lien before paying the others. Finally, contact an attorney to safeguard your settlement and fully understand how one or more liens may affect your claim.

Can You Negotiate a Lien Down?

Whether or not a lien is legal and valid depends on the circumstances. Many states have laws that control how long a lien is legal. There might be an exception that takes away the third party’s right to file a lien against your settlement. If the lien against your settlement is valid, you may be able to negotiate it down with help from a personal injury lawyer in Omaha. An attorney can work with the medical provider or another third party to negotiate how much you owe, as well as protect you by ensuring that you get a fair share of the settlement.

A lawyer will also recommend other ways to maximize your financial recovery, such as not settling too quickly or accepting less than you are eligible to receive in compensation. Your lawyer will have knowledge about liens and reimbursement that can help you protect your legal rights through every phase of your personal injury lawsuit Hiring a lawyer from the beginning can save you money, time and stress, as well as protect your family’s financial future after a serious accident.

For more information about liens in personal injury law, contact Knowles Law Firm to speak to an attorney today.