What Is a Lien and How Does It Affect Lawsuit Settlement?

lien affects on lawsuit settlements

When you file a personal injury lawsuit, there's an expectation that you will eventually settle for financial compensation.

That compensation can help reimburse you for various expenses and financial losses known as damages. However, you aren't necessarily guaranteed to receive 100% of that settlement.

That's because there may be a hold on a portion of any money, known as a lien. But, what is a lien exactly?

In this post, we will explore what a lien is, how it impacts your case, and how the experts at Ally Lawsuit Loans can help you.

What Is a Lien?

It's essential to understand what a settlement lien is because it directly impacts the amount of money you ultimately receive out of your settlement.

In this context, a lien is a claim against a personal injury settlement to pay a debt that you owe as the plaintiff.

With personal injury lawsuits, plaintiffs typically don't pay costs on the case upfront. That is why a creditor may put a lien on their settlement.  

The third-party will file a request for the lien while your lawsuit is pending, and a judge will either approve or deny the request.

If the judge approves their lien, the party holding the rights to that lien will receive money from your settlement before you get the remainder.

Most liens have a direct relation to your case. However, some liens are entirely unrelated, such as a tax lien.

Once a judge approves the lien, there is not much you or your attorney can do because it's considered a legally-owed debt that you must repay.

Common Types of Settlement Liens

To better understand what liens are and how they work, here's a look at the most common types of liens.

Medical Liens

In most personal injury cases, you sought medical treatment after the accident. In some instances, health insurance companies won't cover medical bills from a personal injury accident, or the injured plaintiff may not have insurance at all.

Most medical providers will assert a lien as a way of pursuing payment of your treatment costs.

Even if health insurance pays for your treatment, they may also assert a lien.

Common examples include ERISA plans, government healthcare employee plans, Medicare, Medicaid, and workers' compensation carriers.

Attorney Liens

Most personal injury attorneys work on a contingency basis. Essentially, they are working “for free" until you have a successful case outcome.

In many cases, attorneys take around 33% of your settlement for their fees if your case resolves before the litigation stage. When litigation commences, the attorney's fees often go up to 40% or more if the case goes to trial.

Non-Case Related Liens

Other entities or parties may request a lien that has nothing to do with your personal injury lawsuit. Common examples include child support liens and government tax liens.

The insurance company paying the settlement will ensure there are no outstanding child support liens before issuing any payment.

The government will also come after any potential settlement to ensure your back taxes are up to date. 

Personal Injury Lawsuit Funding Lien

Lawsuit funding is an excellent option for plaintiffs who may be struggling financially while their case is pending. Pre-settlement lawsuit funding companies like Ally Lawsuit Loans put a lien on your anticipated settlement.

Funding is often called a lawsuit loan, but it isn't technically a loan in the traditional sense. You don't have to repay the money if you lose your case.

Lawsuit loans can provide an important lifeline for plaintiffs struggling to pay bills and keep afloat while their case is pending.

Lawsuit loans also level the playing field for a plaintiff. Insurance companies often extend lowball settlement offers, hoping victims will take it because they are hurting financially.

The plaintiff can alleviate their immediate financial stress by getting a lawsuit loan. The loan allows them to pay their bills while they continue pursuing an appropriate settlement or prepping their case for trial.

Understandably, lawsuit funding companies have the right to receive repayment before you get the remaining amount.

That is why they file a lien on settlement as part of the terms of your pre-settlement funding agreement.

Apply for Personal Injury Lien Funding

At Ally Lawsuit Loans, we offer more than just pre-settlement lawsuit funding. We also offer personal injury lien funding.

For example, you can apply for medical lien funding. This funding is similar t pre-settlement lawsuit loans, but there is one crucial difference. 

With lawsuit loans, you receive the money to spend how you wish. You can pay rent, medical expenses, car payments, etc.

With personal injury lien funding, Ally Lawsuit Loans would purchase the existing lien on settlement and continue funding your ongoing medical care.

In this case, Ally Lawsuit Loans would not give the money directly to you. However, you would still be responsible for the repayment of the lien settlement with interest.

How Do You Qualify for Personal Injury Lien Funding?

Like other types of lawsuit loans, you need to have an active case pending where the accident or injury was not your fault. You must be over 18 years of age and represented by an attorney.

Personal injury lien funding can help you get creditors off your back who are bugging you about payment of their lien. You can still apply for a lawsuit loan if you prefer.  

Pre-settlement lawsuit funding can help you pay for things you need while still receiving treatment or negotiating your case. You can use the money to pay for groceries, rent, electric bills, and more.

This type of funding is considered risk-free because you don't have to repay it if you lose your case. If you have a pending lawsuit and need assistance, let Ally Lawsuit Loans be the ally you need.

The application process is easy and involves no credit checks or inquiries into your record. We don't need proof of employment or references. Your pending case serves as collateral for the loan.

Ally Lawsuit Loans offers the lowest rates in the industry. If your case is a good fit, you could have your money in hand in 24 hours or less from the time of approval.

Have questions about lawsuit loans or personal injury legal funding options? Let Ally assist you. Contact our helpful representatives or apply online today.

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