How to Put Liens on Settlements

A lien is a legal hold put on a person's property (like a car or a house, for example) to secure a debt that the property owner owes to someone else. Extending the concept to "future property," as in a settlement one expects to receive from an accident or other situation, a lien can be placed on a future settlement in order to make good on a past debt. For example, a hospital or Medicaid could put a lien on the expected settlement of someone badly hurt in a car accident who had no money to pay their medical bills at the time.

Placing a Lien on a Settlement

Confirm the settlement is likely. It is a waste of time and money to file liens on insurance claims that are not likely to be paid out. So at least confirm the general circumstances of the case and that an insurance settlement is probable before beginning the lien process against anyone.

Fill out all of the appropriate lien-related legal documents and file them with the insurance company of record and/or a court with jurisdiction, depending on the state and the circumstances.

Wait until the insurance company settles or the case is decided in court and an award is determined. Legal fees are deducted first, then all liens on the settlement must be paid, followed by disbursement of the settlement to the individual.

Tips

  • Consider contacting an attorney in your area to get advice regarding filing liens on settlements as laws and requirements do vary from state to state.