In some Sacramento personal injury cases, creditors, medical providers, insurance companies, and other third parties can put in a claim to some of the settlement money you’ve been awarded. This claim is called a lien, and it’s a type of lawsuit that can severely cut into the settlement you’ve earned and need.
Demas Law Group, P.C., has assisted many people and their families trying to protect the full amount of the settlement they’ve been awarded. We can help you next. Call us at (914) 444-0100 to discuss your situation.
Unresolved Liens Hold Settlement
A lien is a court order placed on a person’s personal property to pay debts owed to a third person or entity. In a situation where you will be receiving a claim settlement, the personal property in question is the settlement amount. The third party who is owed money can file a lawsuit asking for an amount from your settlement to pay what money you owe them. For example, liens can be pursued by creditors seeking payments for outstanding bills.
In the world of personal injury there are several types of liens that can be placed on a settlement. A lien can come from a contract or from state or federal law, depending on the situation. Some of the most common types of liens include:
- Medical bills
Often, people with personal injury claims have high medical bills, many of which may be unpaid. The majority of states have laws that allow health care providers to place a lien on the injured person’s settlement to ensure they receive payment for services. This can allow a person who may not have insurance to still receive treatment for their injuries and put of payment until their case has settled. Many states also have laws that permit the injured person to reduce a health care provider’s lien by the same percentage that the individual is paying their lawyer. An injured individual’s lawyer can also negotiate with the health care provider to settle for a smaller amount than the lien.
- Insurance liens
Insurance companies will usually have a contractual lien written into their policies which ensures that if they pay out insurance benefits to an injured person, they will be repaid in the event that the same injured person receives any proceeds from a personal injury settlement or verdict. Like a medical lien, many states have laws that require an insurance lien be reduced by the same percentage of the recovery that the injured person’s lawyer is receiving.
- Credit card debts
Often, those who are injured in an accident end up unable to work for at least a short time, if not long-term or permanently. When this occurs, they may lose income and can accumulate credit card debt. Unlike insurance companies, a credit card company has no contractual or statutory right to a lien on a personal injury claim. Because of this, most credit card companies will negotiate a reduction in the amount owed if the injured person agrees to voluntarily give them a lien on the personal injury claim. Before agreeing to any lien with a credit card company, be sure to speak with your lawyer who can negotiate the amount and determine if the lien is in your best interests or not.
- Pre-settlement loans
Some individuals who are injured may take out a pre-settlement loan to ensure their needs are met until they are able to receive payment in a settlement or verdict on their case. When you take out a loan, the contract with the loan company gives them a lien on the proceeds of your claim. Though your lawyer can attempt to negotiate, pre-settlement loan companies rarely agree to a reduced amount.
- Governmental liens
Injured individuals who receive local, state, or federal government benefits as a result of their injury can expect a lien on their settlement or verdict. These benefits can include Medicare and Medicaid benefits, unemployment benefits, welfare benefits, food stamps, and even housing benefits. Other government-related debts like unpaid taxes, child support, or alimony can also lead to a lien on a personal injury settlement or verdict. Like medical and insurance liens, some states have laws that determine if governmental liens can be reduced based on the attorney’s fee. It is important to note that government agencies will rarely negotiate a lien, especially for debts like unpaid taxes or child support. Their position is firm that the individual, though injured, still owes whatever the amount of the lien is.
A lien is sometimes called a security interest. The individual or company who is owed money wants to ensure they will be paid. If a lien exists on your settlement, your lawyer must repay the lienholder before disbursing any of the settlement or trial proceeds to you. If the lawyer knowingly fails to repay the lien out of the settlement or verdict, the lienholder can sue the lawyer and you, as their client, for the money. Your lawyer should work hard to obtain any information and resolve any issues quickly to ensure you receive your full settlement amount.
If you have been injured due to the negligence of another person, there are many complex issues that you will face as you attempt to collect compensation. It is important to have the right guide through the maze of legal procedures. Be sure to contact a personal injury attorney as quickly as you can to ensure your rights are properly respected and represented during this time.
This literature may be considered attorney advertising or an offer of professional services, according to rule 1-400 Rules of Professional Conduct by the State Bar of California. The information does not constitute a guarantee, warranty or prediction regarding the outcome of your potential legal matter.