How a Personal Injury Settlement Lien is Created

Sometimes, in a personal injury settlement, the injured party does not receive the compensation due to him because of bankruptcy or an unwillingness to pay. In this instance, the individual due compensation is not without recourse.

Explanation of a Settlement Lien

A settlement lien is where the court attaches funds, income or property owned by the responsible party to pay for the amounts due to the injured party. To have this occur, there must already be an order entered stating that the party seeking the lien is owed money and there must have been inadequate or no payment on this order. An order can only be entered after a trial or settlement negotiations have settled the initial dispute.

The Lien Process

To have a lien created, you must first petition the court for a lien. This petition may or may not be filed with the original court that created the order for payment, depending on your state and local court rules. In this petition, you must state that 1) you are owed money by the order, 2) you have not received your money and 3) the other party is responsible for paying you. You should also include a copy of the order requiring payment to your petition.

The Next Steps

After receiving a petition, the court will hold a hearing to determine whether the petition’s allegations are true. Both parties will be summoned to the courtroom and be provided with the opportunity to explain their side. Normally, a jury is not present for this hearing and the issue is decided by the judge alone. At the end of the presentations, the judge will decide whether the allegations are true and find that either the petitioner or the respondent wins.

Subsequently, possibly even as fast as immediately following his ruling, the judge will review the list of assets held by the party owning money. If the owing party’s assets are not immediately known, the court will order him to turn over an accounting of all of his assets to both the court and the other party.

Setting Up the Lien

After receiving documentation detailing the owing party’s assets, the court will set up the lien. A lien is a right to the property or any proceeds derived from the sale of property. A lien is not the same as garnishing wages, which is where a portion of the owing party’s income is removed and given to the injured party. A lien is an ownership right that transfers with property and provides the owner with the right of first refusal in a sale.

Getting Legal Help

If you are involved in a personal injury lawsuit in which a lien is an issue or pending, seek legal assistance. An attorney will discuss your local lien laws with you and how to have a lien created or avoid a lien.

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