How a Lien Can Affect Your Personal Injury Settlement

Third parties such as medical providers and health insurance companies may be paid directly from your settlement, depending on your situation. So, when negotiating for compensation, it is advisable to work with an experienced professional such as Sarasota personal injury lawyer. The lawyer helps in protecting your interests by maximizing your payouts by identifying unauthorized liens. You may also need an experienced legal team since you may be involved in many negotiations and court battles. 

The Probable Effects of a Lien on Your Personal Injury Settlement

As discussed above, the only effect of a lien is a reduction of the personal injury claim. However, the amount may vary depending on different factors. For example, an excellent legal representation is your best shot at getting a favorable outcome by negotiating the figures presented by other parties. If you do not have legal representation, all the demands on your settlement may be met, reducing your payout to a fraction. So, you may have a chance at protecting your payment, even liens placed against the payout.

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The Most Common Liens in a Personal Injury Settlement

In the USA, multiple entities qualify to place a lien on your personal injury settlement. Government agencies can apply for a lien to be paid from your gross settlement. Agencies such as Medicaid and Medicare are more likely to place a lien on your payment. If you are a veteran, the Veteran Administration may apply to be paid directly through your payout. The IRS also qualifies to place a request to be paid directly, especially if you owe back taxes. 

Besides government agencies, insurance companies are the second most common lienholders. Since it is almost impossible to front the cost of treatment, they may settle the bills and later be paid directly through the settlement. Unlike most applications, the lien is a result of prior agreement. In most cases, you must sign an agreement with the health insurance (in the presence of your lawyer) agreeing to pay the health insurance company from the settlement. 

In addition to government and private entities placing a lien on your settlement, you may get some unexpected applications from creditors. If you have some outstanding debt, such as bank loans, credit card debt, and other unsettled financial obligations, you may be forced to pay them through the money awarded in the settlement. Also, spousal and child support claims qualify as legitimate lien claims.

The Lawyer’s Role in Protecting Your Injury Settlement from Unwarranted Liens

After receiving payment requests from the above parties, you have three options: pay, negotiate or not pay at all. The last option may land you in legal battles, and therefore, it is not the best option. The pay option may not land you into legal cases, but it may reduce your injury settlement, leaving you with a fraction of the payout. The final option is to negotiate through your lawyer and if you do not agree with some liens, dispute them using the available legal means.

Like in other jurisdictions, you can negotiate any lien through your lawyer. Even though the request may sound like a definite request to pay, the health insurance company, for example, allows the lawyers to negotiate and probably bring the deduction down. Your lawyer can also check the lien details and verify whether the figure reflects the medical cost. If the cost is inflated, they can suggest a lower cost, and as a result, save you money. 

Besides negotiating the lien value with the health insurance company, you can dispute other liens as invalid, especially from third parties such as banks and financial institutions. If you receive a lien from a financial institution and you have previously cleared the debt, you can content the request in a court of law using your legal representation. If you convince the court, the lien can be removed by the judge from your injury settlement. However, if the court rules otherwise, you do not have an option other than paying. 

In addition to representing your interests, the lawyer should offer you legal advice during the process. Since there are many possible outcomes and the liens may be overwhelming, you should ask your lawyer questions at every stage. If you disagree with a request from a particular party, you should consult with them in the best way possible. Also, the lawyer should help weigh options, especially when negotiating on whether to pursue certain matters to courts and when to give in to the other party’s requests. 

While the only effect of a lien on your personal injury settlement is a deduction on the total payout, you still have a chance of negotiating and reducing the deductions. However, you may need services from a good lawyer.

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Benjamin Garfield

Benjamin is currently working as a divorce lawyer and even likes writing articles related to laws and legalities. She has an experience of 10 years in Civil law and loves to read law books. She also works on his website and keeps updating about the latest laws and rules on his social media.


  • Legal Contract
  • Civil Law
  • Divorce

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