WRECKED car after filing Chapter 7 and planning to surrender.

[jessierjohns]

So I was originally in a 13 for a little over a year decided the payments I was making just to really keep my car was too much. Converted over to a Chapter 7 a few weeks ago and just got into a car wreck a few days ago. My deductible is $2000 ( I know ) and the insurance company will not pay out to the body shop until they receive notification that I have paid my deductible. My car is sitting in the back of my house and I really don't see why I should scrape up the money when I was already surrendering the vehicle. What to do? If I take it to the shop they may place a lien on it for failure to pay I'm just lost. Any advice please!

[justbroke]

Tell the lender to come and get their car. You selected "surrender" on your Statement of Intentions (SoI), right? Unfortunately, this put you without a vehicle. Since you're in a Chapter 7, you "may" be able to get a new (used) car through 722 Redemption (part of US Bank). The rates will be in the high teens from US Bank if you qualify.

What a shame. I would never carry a $2,000 deductible and I make more than 8 times that deductible a month. I currently carry a $500 deductible and the worse I ever carried was $1,000. The difference in the insurance price is almost negligible when I looked at raising the deductible. My insurance only went down like $20 over 6 months by doubling the deductible. Not worth the risk. Enough of my soap box and piling on.

If you were going to scrape up $2K, scrape it up to buy a "reliable" beater until you are back on your feat. Within 6 months after your Chapter 7 discharge, you should be able to get rates below 10% and may even receive a 4.5% rate as I did from NFCU.

[LadyInTheRed]

Leave the car where it is. When the lender comes to get it, show them where it is and give them a copy of all documents related to the insurance claim. They can collect the insurance proceeds.

Please also check with your attorney to make sure his/her advice is the same.

[jessierjohns]

Thanks guys for responding! As crazy as it sounds my insurance rate was so high to keep it in budget I had to object to a higher deductible at the time.

[justbroke]

Definitely check your attorney, but my colleague's advise is spot on. When the lender wants to come get it, let them come and get it. They can file a claim with your insurer should they choose.

[bcohen]

Thanks guys for responding! As crazy as it sounds my insurance rate was so high to keep it in budget I had to object to a higher deductible at the time.

That's the problem with today's credit-based insurance pricing. Even 3 years out of a Chapter 7 discharge, with zero debt, and a good driving record, I received car insurance quotes which were more than twice what my peers with good credit pay--some of whom have recent tickets and/or accidents. Since my car is a beater, and worth less than $2000, I mitigated that problem by getting liability only with relatively low limits of $50,000 property damage/$50,000 death or injury to one person/$100,000 death or injury to multiple persons. If I was able to obtain reasonable pricing, I would have better car insurance.

[justbroke]

bcohen, it is shameful that insurance companies, in all these no-fault States, can use credit-based underwriting. I understand it in part, but I have never filed a claim from any accident because I've never been in an accident (knock on cyber-wood). I still can't get traditionally underwritten vehicle insurance (that uses credit scoring), because they see the bankruptcy and act like a have the plague.

I asked an insurance person how they "insurance" score works. A bankruptcy basically give you a big target on your forehead. The model then looks at the likelihood of you filing a claim. The more credit you have available (think low utilization) and the more access to credit you have (think high credit limits), combined with your profession, education, years as a driver, accident history, ticket history, and where you live, they will give you the best rates. They figure with lots of available credit, you're less likely to file a claim! They actually want you to not file a claim if you're in an accident unless it's rally liability related.

I mean, why do we carry insurance? It's not "catastrophic" insurance but they treat it as such.

Okay, I'm back off my soap box.