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Can Creditors Take My Personal Injury Settlement in Anderson, IN?

May 3, 2024 | Personal Injury


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You’ve won a nice settlement for your car accident or medical malpractice case. Before you can deposit the check into your bank account, though, you hear some unsettling news. There’s a lien on your settlement, and now you’re worried you’ll lose this much-needed compensation.

If you wonder, “Can creditors take my personal injury settlement?” our attorneys in Anderson, Indiana, are here to explain which entities can place a lien on your settlement.

What Is a Lien?

A lien gives a third party a claim to some or all of your settlement funds. Creditors and certain government agencies, such as Medicaid and the IRS, can place liens on your settlement.

If your settlement has a lien, a creditor will take the amount you owe first and leave you with a portion of your original compensation. You could lose your entire settlement depending on how many creditors have judgments against you.

What Are the Consequences of a Lien?

In addition to giving creditors access to your settlement money, liens can damage your credit score. This is very problematic if you’ve been planning to buy a car or home. The vast majority of creditors won’t lend to you if you’re deeply in debt.

Who Can Take Your Personal Injury Settlement?

If you’re asking, “Can creditors take my personal injury settlement?” the answer is yes. Several entities may place a lien on your settlement, as outlined below.

Insurance Companies

Accidents often come with massive hospital bills. Even long after you’ve left the emergency room, you’ll have to worry about paying for doctor’s appointments, medications, physical therapy, and surgery.

If you used your health insurance to pay for medical bills after an accident, the insurance company can place a lien on your settlement. Auto insurance companies can do the same.

Government Agencies

Medicaid, Medicare, and the Department of Veterans Affairs (VA) all pay for medical care after an accident. This may come as a relief, especially if you’re low-income and have no chance of paying those bills out of pocket. However, all three agencies can recover your medical expenses by placing a lien on your settlement.

Do you owe taxes or penalties back to the IRS? Whether you deliberately didn’t pay taxes or simply forgot, the IRS will quickly pounce on your settlement money.


As you might imagine, creditors dislike it when you don’t pay your bills. If you have a large amount of credit card debt and haven’t worked out a repayment plan, a creditor can easily snatch your settlement money.

Child and Spousal Support

Courts can place a lien for garnishment on your settlement if you haven’t kept up with child support or spousal support (alimony) payments.

What To Do If There’s a Lien on Your Settlement

You may think there’s little hope if lienholders have a lien on your settlement, but this isn’t necessarily so. Sometimes, it’s possible to contest a lien by petitioning your local court.

Filing for bankruptcy may also eliminate some liens, although this is often a last-resort option. Bankruptcy can lower your credit score by more than 200 points. Additionally, bankruptcy stays on your credit report for either seven years (for Chapter 13) or 10 years (for Chapter 7).

It’s wise to ask an Anderson attorney whether the lien is valid. If it is, and you genuinely owe money to a creditor, consider working with the creditor on a debt repayment plan. For instance, a creditor might agree to accept $100 each month rather than taking a $5,000 lump sum out of your settlement.

Some creditors might also be willing to settle for far less than what you owe. It never hurts to call and ask. Explain your situation and why you need that settlement money (to cover medical bills or lost wages, for example). The creditor may take the offer if you say that you can only afford to pay $1,000 rather than $5,000.

Contact an Anderson Attorney for Help With Contesting Liens

If you still wonder, “Can creditors take my personal injury settlement?” or want to know whether you should hire an attorney after you have a settlement offer, call Stewart & Stewart Attorneys at (800) 333-3529 for a free consultation with an Anderson lawyer.

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If you have been involved in an Indiana personal injury accident, contact us at Stewart & Stewart Attorneys. Our Indiana personal injury lawyers represent victims throughout the state, including Carmel and Anderson. We have also successfully advocated for clients throughout the area, including Fort Wayne, Gary, Indianapolis, South Bend. Complete a free online consultation form or call us at (800) 33-33-LAW!

Stewart & Stewart Attorneys have the knowledge and experience to defend your rights in the following areas of Indiana injury law: auto accident, brain injury, drug injury, defective product, fire and burn injury, insurance dispute, medical malpractice, motorcycle accident, nursing home abuse, slip and fall,  truck accident, workers’ compensation and wrongful death.