diff --git a/subsys/settings/include/settings/settings_zms.h b/subsys/settings/include/settings/settings_zms.h
index 5c8db6c8673..271291dba13 100644
--- a/subsys/settings/include/settings/settings_zms.h
+++ b/subsys/settings/include/settings/settings_zms.h
@@ -60,10 +60,9 @@ extern "C" {
 #define ZMS_COLLISIONS_MASK GENMASK(CONFIG_SETTINGS_ZMS_MAX_COLLISIONS_BITS, 1)
 #define ZMS_HASH_TOTAL_MASK GENMASK(29, 1)
 #define ZMS_MAX_COLLISIONS  (BIT(CONFIG_SETTINGS_ZMS_MAX_COLLISIONS_BITS) - 1)
-#define ZMS_HEADER_HASH     0x80000000
 
 /* some useful macros */
-#define ZMS_NAME_HASH_ID(x) (x & ZMS_HASH_TOTAL_MASK)
+#define ZMS_NAME_HASH_ID(x) ((x & ZMS_HASH_TOTAL_MASK) | BIT(31))
 #define ZMS_UPDATE_COLLISION_NUM(x, y)                                                             \
 	((x & ~ZMS_COLLISIONS_MASK) | ((y << 1) & ZMS_COLLISIONS_MASK))
 #define ZMS_COLLISION_NUM(x) ((x & ZMS_COLLISIONS_MASK) >> 1)
diff --git a/subsys/settings/src/settings_zms.c b/subsys/settings/src/settings_zms.c
index abb8989c203..777c0105a71 100644
--- a/subsys/settings/src/settings_zms.c
+++ b/subsys/settings/src/settings_zms.c
@@ -232,6 +232,8 @@ static int settings_zms_save(struct settings_store *cs, const char *name, const
 	delete = ((value == NULL) || (val_len == 0));
 
 	name_hash = sys_hash32(name, strlen(name)) & ZMS_HASH_MASK;
+	/* MSB is always 1 */
+	name_hash |= BIT(31);
 
 	/* Let's find out if there is no hash collisions in the storage */
 	write_name = true;
@@ -311,6 +313,16 @@ static int settings_zms_save(struct settings_store *cs, const char *name, const
 		}
 		/* write linked list structure element */
 		settings_element.next_hash = 0;
+		/* Verify first that the linked list last element is not broken.
+		 * Settings subsystem uses ID that starts from ZMS_LL_HEAD_HASH_ID.
+		 */
+		if (cf->last_hash_id < ZMS_LL_HEAD_HASH_ID) {
+			LOG_WARN("Linked list for hashes is broken, Trying to recover");
+			rc = settings_zms_get_last_hash_ids(cf);
+			if (rc < 0) {
+				return rc;
+			}
+		}
 		settings_element.previous_hash = cf->last_hash_id;
 		rc = zms_write(&cf->cf_zms, name_hash | 1, &settings_element,
 			       sizeof(struct settings_hash_linked_list));
@@ -342,9 +354,22 @@ static int settings_zms_get_last_hash_ids(struct settings_zms *cf)
 	do {
 		rc = zms_read(&cf->cf_zms, ll_last_hash_id, &settings_element,
 			      sizeof(settings_element));
-		if (rc) {
+		if (rc == -ENOENT) {
+			/* header doesn't exist or linked list broken, reinitialize the header */
+			const struct settings_hash_linked_list settings_element = {
+				.previous_hash = 0, .next_hash = 0};
+			rc = zms_write(&cf->cf_zms, ZMS_LL_HEAD_HASH_ID, &settings_element,
+				       sizeof(struct settings_hash_linked_list));
+			if (rc < 0) {
+				return rc;
+			}
+			cf->last_hash_id = ZMS_LL_HEAD_HASH_ID;
+			cf->second_to_last_hash_id = 0;
+			return 0;
+		} else if (rc < 0) {
 			return rc;
 		}
+
 		/* increment hash collision number if necessary */
 		if (ZMS_COLLISION_NUM(ll_last_hash_id) > cf->hash_collision_num) {
 			cf->hash_collision_num = ZMS_COLLISION_NUM(ll_last_hash_id);
@@ -375,23 +400,9 @@ static int settings_zms_backend_init(struct settings_zms *cf)
 	cf->hash_collision_num = 0;
 
 	rc = settings_zms_get_last_hash_ids(cf);
-	if (rc == -ENOENT) {
-		/* header doesn't exist or linked list broken, reinitialize the header */
-		const struct settings_hash_linked_list settings_element = {.previous_hash = 0,
-									   .next_hash = 0};
-		rc = zms_write(&cf->cf_zms, ZMS_LL_HEAD_HASH_ID, &settings_element,
-			       sizeof(struct settings_hash_linked_list));
-		if (rc < 0) {
-			return rc;
-		}
-		cf->last_hash_id = ZMS_LL_HEAD_HASH_ID;
-		cf->second_to_last_hash_id = 0;
-	} else if (rc < 0) {
-		return rc;
-	}
 
 	LOG_DBG("ZMS backend initialized");
-	return 0;
+	return rc;
 }
 
 int settings_backend_init(void)