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When May Your Personal Injury Settlement Be Subject To A Lien?

If you've been injured in an accident and are currently embroiled in a lawsuit against the person at fault (or his or her insurance provider), talks may be turning to settlement. Settling a case before trial can provide many advantages to both parties and may help you receive more funds than you would net after paying for an expensive trial. However, if you fail to negotiate this settlement properly, you could find your funds subject to seizure or garnishment by your creditors before you ever see a check for your injuries. Read on to learn more about when a creditor may place a lien on a personal injury settlement, as well as what you can do to protect your settlement from seizure.

What happens during the personal injury settlement process?

If you choose to settle your case without a trial, your attorney will spend time negotiating with the opposing party's attorney to come to a final number everyone agrees is fair. This number is designed to cover your actual medical expenses, potential future expenses, lost wages, damaged property, and pain and suffering. Your attorney's fees for handling the case will also be taken out of your total settlement amount.

Once you've agreed on a final valuation figure for your claim, you'll sign a document releasing your claim against the defendant, and the case will be dismissed. Thoroughly reading and understanding this claim release document is important -- by accepting the settlement funds, you give up the right to sue this company or individual for any future injury caused by the initial accident.

When can your funds be subject to liens? 

In some cases, you may have been paying medical expenses out of pocket, as they were incurred. If this is the situation, the entire balance of the settlement should be payable to you (once your attorney has taken out his or her fee). 

However, if your bills are too high for you to pay out of your ordinary income, you may be deemed to have defaulted on these bills. If this is the case, and if the creditor has sued you in civil court for a judgment on these bills, the creditor may be able to garnish or seize any settlement funds you deposit in your bank account. If you're employed, a creditor may also be able to garnish your regular wages until the debt is fully paid.

It's important to make sure your financial affairs are in order before your settlement money ever hits your bank account. In some cases, you may not want to sign the claims release document until funds have been disbursed by the defendant to your creditors, extinguishing any potential claims against the rest of the funds you'll receive. Being prepared and doing your research on all your outstanding debts before accepting a settlement can help ensure you won't be taken by surprise. 

For more information, contact Palmetto Injury Lawyers or a similar firm.