QUESTION
What can happen if you keep the insurance money for a vehicle if it is financed and not fix it?
Asked on Sep 23rd, 2013 on Bankruptcy - South Carolina
More details to this question:
I had a vehicle that was bank financed; I let a third party take over the vehicle and payments, but still carried the insurance. The third party wrecked the vehicle and the insurance paid me directly so I kept the insurance money to buy another vehicle and let the car go back to the finance company. I was upside down in the vehicle from the beginning and could no longer afford the payments. I am filing bankruptcy and including the vehicle. Is there anything the finance company can do to me legally?
2 ANSWERS
Debt Collection Attorney serving Chicago, IL
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Edelman, Combs, Latturner & Goodwin, LLC
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Whether you are in violation of the loan agreement/ retail installment contract depends on its terms. Generally such agreements give the creditor a security interest in proceeds (insurance money) and require that it be used to fix damage to the collateral (car). Also, letting a third party take over the vehicle and payments is likely to be a breach of the agreement if done without the consent of the creditor. You should show the documents to your bankruptcy lawyer and find out if you are likely to face a claim that the debt is nondischargeable as a result.
Answered on Sep 25th, 2013 at 7:56 AM
Bankruptcy Attorney serving Charleston, SC
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Davis Law Firm
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Apparently, the insurance company did not have a record of the lien on the vehicle. You need to discuss this with your attorney as the insurance company may claim you acted in bad faith and that you are therefore not entitled to a discharge. Although the chances of this happening are not great, neither is winning the lottery. Insurance companies have lots of money and may decide to send a message to other persons in a similar situation as yours by blocking or attempting to block your discharge. You should discuss with your attorney the likelihood of this occurring and the cost of defending a complaint to block your obtaining a discharge. Bankruptcy is not something you should attempt to do by yourself, using a friend or otherwise not obtaining competent representation. A good rule of thumb is that if you cannot afford to hire an attorney, you should strongly consider whether this is the right time to file a bankruptcy. Bankruptcy is about a "fresh start" and not about getting rid of debt. If you're not ready to move forward in your life and have not made the plans necessary to do so, figure out how and what you need to do to move forward before you file bankruptcy.
Answered on Sep 25th, 2013 at 7:55 AM