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The Ultimate Guide to Understanding Who Can Interpleader

Three women discussing who can interpleader.

Interpleader is a legal process where two or more claimants seek legal relief from a third party. They usually initiate the process on behalf of a person or entity that is unable to settle the dispute. In this guide, we’ll discuss who can interpleader and what you need to know about this procedure.

What is Interpleader?

Interpleader is a legal action that multiple entities or parties can use to resolve disputes. Our law firm has frequently engaged in disputes involving life insurance. In addition to being an equitable remedy, it also allows third parties, the defendant or claimant, to file suit instead of having to wait for one party to bring an action against another. This helps to avoid multiple and costly suits while still allowing each party the opportunity to present their case in court.

Who Can Interpleader?

Generally, any person, entity or person involved in a dispute may file an interpleader action. These parties can include banks and credit unions that have received funds from two or more rival claimants. Our law firm often gets involved in life insurance interpleader disputes. Interpleader actions are also commonly filed by corporate entities when there is a dispute between shareholders as well as insurers who need to settle claims made against the same policy. In some cases, a court can intervene and order an interpleader action if they deem it the most equitable solution.

The Procedure of an Interpleader

An interpleader action follows a typical court procedure. The claimant (or depositor of funds) begins by filing a complaint with the court and naming the potentially interested parties. Once the complaint is filed, all other interested parties are required to join in the action to contest their rights to the property in dispute. Next, discovery will take place and documents will be exchanged between the parties. Ultimately, there will be a hearing or trial where the judge will make a final determination on an equitable distribution of any disputed funds.

Benefits of Using Interpleader

There are several benefits of using interpleader to resolve disputes or controversies involving multiple parties. Interpleader can facilitate an efficient resolution, improve accuracy and prevent double payment, reduce the potential for legal costs, and limit the chances for costly litigation. In addition to that, it simplifies the process for everyone involved, as the court will serve as a neutral third-party mediator to settle the dispute.

Alternatives to an Interpleader

If a party is ineligible to interpleader, there are several other possible alternatives. These include arbitration, mediation and negotiation, which take place outside the court. In some instances, a case can be removed to federal court if there is a valid diversity jurisdiction question between the parties involved. Additionally, lien foreclosure procedures and contract-based litigation are possible solutions depending on the facts of the situation.

Still Have a Question About Who Can Interpleader?

You don’t have to do this on your own. We’ve handled lots of other interpleader cases. We are an Arizona law firm, and we handle life insurance interpleader cases around the U.S. Give us a call at 602-443-4888. We’ll let you know what your next step is, and how to protect your rights.



Founding attorney Paul Deloughery has been an attorney since 1998, became a Certified Family Wealth Advisor. He is also the founder of Sudden Wealth Protection Law.