Victims of personal injury claims are surprised when they receive a settlement amount less they were expecting to receive. If you have filed a personal injury claim in a court of law and expect a particular settlement award, you should know what a lien is.
If you owe money to government authorities, insurance companies, have outstanding debt from creditors such as banks, or you have a financial arrangement with a lawsuit funding company, they will have a legal claim in your future settlement money.
This means that the courts of law will satisfy the declaration of the lienholders and then transfer the remaining amount from the winning settlement to you.
This article will discuss the concept of liens and the most common lienholders. It will also discuss the impact of the lien on your lawsuit settlement. So let’s dig into it.
What is a lien?
A settlement lien is a legal terminology that refers to a third-party legal claim to all or some of your judgment or settlement money.
If there is a valid lien, the lienholder will be entitled to receive their share of the settlement amount awarded by the court, and if all the liens are satisfied, the claimant will receive the remaining amount of the settlement.
When you file a personal injury suit and claim compensation for the injuries caused to you, the lien holders will approach the courts and provide evidence to establish their legal right of lien in your settlement award.
They may submit a document or other evidence to prove their lien. If the court recognizes its legitimacy, the lien holder will be informed about the final settlement payment, and they will get their legal share before entrusting the payment to the claimant.
Once the liens are satisfied, the claimant will receive the remaining amount.
Who can place a lien on your personal injury claims?
Lienholders are like creditors who have provided funding or service to you under the condition that you will pay back to them. They can be both private and public entities.
Some of the standard lien holders are explained below:
1- Government Agencies
One of the most common lien holders is government agencies such as Medicare, Medicaid, etc.
Similarly, if you owe back taxes to the internal revenue services (IRS), you can expect a lien on your settlement.
Government agencies with a valid claim of lien approach the court to satisfy their claims, and their claim takes precedence over other lienholders. This means that the lien of government agencies is satisfied first, and then the claims of other lienholders are entertained.
2- Insurance Companies
Insurance companies are also common lienholders in personal injury claims. If you have incurred injuries and the insurance companies have paid your medical bills, then you can expect a lien from them towards your pending settlement.
3- Medical liens
When you need medical treatment for injuries that result from a personal injury, and you don’t have insurance to pay for the cost of the procedure, medical providers can put a lien on your upcoming settlement.
4- Unrelated Liens
In addition, other creditors with outstanding debt, such as banks loans, may also have a valid lien claim and may approach the court to receive their share of your compensation.
5- Personal Injury Settlement Funding Liens
If you have received personal injury settlement funding from a lender, they will have a valid legal claim to receive the agreed-upon amount they gave you from the anticipated settlement.
Lawsuit funding is also a lien, and funding companies will receive their share after the claim is satisfied. Only then will you will be entitled to the remaining amount of the settlement claim.
Lawsuit settlement funding companies enter into a financial arrangement with victims of personal injury lawsuits. As the lawsuit takes months and even years to finally decide, these victims face problems paying for their financial liabilities.
Due to these financial concerns, some claimants may not be able to continue their legal battle.
Lawsuit funding companies come to the rescue of these victims who have a meritorious claim, but they may not be able to pursue their case until the end due to financial restraints.
Thanks to lawsuit funding, plaintiffs can approach to get advances on their pending settlements, and if the application is approved, the claimant will receive funding to pay their bills and more. In return, the claimant agrees to pay a specific percentage from the coming award, which will be placed as a lien.
Want to learn more about lawsuit loans or personal injury legal funding? Look to Baker Street Funding for quick financing today.