What Is A Lien And How Does It Affect My Settlement?

When you are injured due to someone else’s negligence, you are entitled to a recovery. However, you may not be the only party that is entitled to a recovery. Your insurance company, Medicare or Medicaid may also have an interest in your recovery.

Why is that?

If you are on Medicare or Medicaid and if they have paid for your medical bills after an accident, they are entitled to a portion of your settlement (also known as a lien.) They believe that since your injuries were the responsibility of others that the lienholders should recoup some money from the person who caused your injuries.

The amount that they request depends upon the amount of money that they paid and the amount of money that you recovered. Often, Medicare or Medicaid will negotiate the lien amount with your lawyer. This is because if the amount of lien that they are proposing is too high, you may not wish to settle your case and they will not get any recovery. You should, however, bare in mind the amount of your lien before you settle.

What if you take out a loan on your personal injury case?

Another lienholder could be the loan company that gave you a loan to help you while you were waiting for your personal injury settlement. These loan companies are notorious for tacking on huge interest rates and compounding interest monthly, resulting in huge liens. You should know, however, that courts have frowned upon many of these loan company practices, and attorneys have been able to have the amount lowered substantially.

For instance, in one case that I handled, my client took out a $5,000 loan. When his case settled, the loan company asserted a $17,000 lien. However, after I reasoned with the company and showed them cases where courts found such practicies unreasonable, I was able to lower the amount of the lien to $9,000, which was acceptable to my client.

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About the Author

Jason B. Kessler Attorney At Law is a full service law firm where attorneys with their extensive experience provide strong & Aggressive defense against Personal Injury cases.