Liability for damage on Vehicle that was surrendered...

[sh9730]

SO, I thought I was totally and completely done with the BK part of things! Am still working on my loan mod, but that is a different topic.

BUT, maybe Im not......I may be jumping the gun here as nothing has happened YET, but Im trying to get answers ahead of time if possible so I know what Im talking about.

As many of you have read, I had two cars during my BK (discharged 8/11 - closed 8/18), one of which I indicated surrender, and EVENTUALLY (after discharge) the bank picked up the car. This car was not in my possession, or even in my state (ex girlfriend had it - but was all in my name), but to be safe I kept insurance on it until it was picked up.

ANYWAY, I got a call last week from the claims dept of my insurance company. The lien holder is claiming HAIL DAMAGE on the car and wants my insurance company to pay the claim. Hence they called me to see if I knew about the damage, when it occurred etc (normal insurance company stuff). I didnt know anything about it since my ex was driving the car (in a "borrowed" status) and I said as much. I also told ins co her name, but that I really had no easy way to get ahold of her (all true). I also told ins co that this loan was discharged in BK etc.

The rep tells me that they may still have to pay this claim after investigation, minus my deductible....she says that it is between the lien holder and me how to handle the deductible (by the way it is 1K deductible).

IF the claim is approved will I have to pay the 1K to the lien holder? I have no way to know WHEN the damage occurred (pre or post filing)...and I tried and tried to get them to pick up this car BEFORE I ever filed...but they wouldnt do so...then it got caught up in the BK process due to a possible lien issue so they never got it until after discharge....

Any input would be greatly appreciated. Again, so far I dont even know that the insurance company is going to pay the claim, and have not heard word one from the lien holder about this issue....all communications were between the bank and the insurance company.

Thanks in advance.

[HHM]

The key fact is to know "when" the damaged occurred. However, it will probably be less hassle and less pain to simple pay it. If it occurred BEFORE filing BK, you could arguably amend your petition and include the claim the in your BK, if the damage occurred after the BK was filed, then you certainly out of luck and will need to pay.

If the car was insured and assuming the policy covered such damage, the insurance company will pay. IF you haven't filed BK, you should probably just include the claim in your BK, let whatever attorney you hire know about the situation, but the claim should be discharged.

[sh9730]

HHM,

Thanks...yeah I figured WHEN the damage occurred is the important factor. The insurance company was of course asking me that question as there was a couple week period when the car was not insured (when I THOUGHT the lien holder was going to pick it up initially but never did - so I reinsured it). I have no way of knowing one way or the other since the car wasnt in my posession and I have no contact with my ex. The insurance company may try and find her and get her statement, or they may just pay the claim.

If they pay it then maybe the lien holder will just be satisfied with that amount and leave me alone. If the bank ever does contact me maybe I ll play a little bit and say they have no way to prove the damage DIDNT occur pre-filing....see what happens...if they keep pushing I ll try and settle with them.

Thanks for the quick answer.

[LadyInTheRed]

If the damage occurred before the bank picked up the car, your insurance company will have to pay the claim. The fact that you tried to get the bank to repossess the car earlier than it did is irrelevant.

I don't think you have to pay the deductible to the lender. Basically, the damage made the car less valuable to the bank, so the deficiency is larger than it would be if the car was not damaged. If your loan wasn't discharged, they could come after you for the deficiency (the loan balance, plus interest and penalties, less the net sale proceeds and insurance proceeds). But, if the loan was discharged in your BK, the bank can't come after you for the deficiency. The bank is lucky you didn't cancel everything except liabilty insurance.

If the lender tries to get you to pay the deductible, tell then the debt was discharged in BK. If they don't agree, contact your attorney.

[sh9730]

LadyinRed,

Thanks...of course now I am more confused since Im getting two viewpoints that both seem to make sense! LOL!

So, I guess maybe I ll just have to wait and see how it plays out and ask any specific questions that come up.

Thanks!

[LadyInTheRed]

If the damage occurred after your BK, I think HHM is looking at this as damage that occurred to the bank's property that you are responsible for. If that is a valid claim (I don't know if it is), it would be a post-petition claim that you would be liable for.

I am looking at the bank's claim as a claim for deficiency on a discharged debt. I read your post to say that the loan was discharged in BK.

You should always confirm any info you receive on these boards with your attorney, even if 10 people give you the exact same answer.

[sh9730]

Lady,

Thanks. Just to be clear...the loan WAS discharged. But I dont KNOW for sure whether the damage occurred pre or post filing. So, yes I understand that the insurance company will likely pay the claim since the car was INSURED both pre and post filing (with that small exception I indicated) so when the damage occurred is of little consequence to them....but your answer about the deductible makes sense...on the other hand, I worry that the lien holder will say this is a "new", "post filing" DEBT since the damage very well may have occurred post filing, hence they might argue the BK doesnt cover the deductible.

I of course hope YOU are correct! LOL.

And yes, I do always put the posts here into proper perspective. In this case, IF IF IF they ever send ME some sort of bill, the amount they are asking for will heavilly decide my response. If it is 1K or under, and I can even settle it for less....not worth getting an attorney involved. UNLESS, I somehow deem that if they continue to come after me for a discharged debt that they will be in violation. But that is a lot of IFs at this point.

Thanks again.

[dman]

It's just an iffy situation. Here's what I'd do if I were in your shoes:

Tell them what you've already said. You tried to get the bank to get it, they wouldn't, you couldn't get it for whatever reason, so you kept insurance mainly for liability reasons (and if you would have had only liability insurance, this probably wouldn't be an issue, but I digress). The insurance company isn't going to come after you for the deductible; IF they pay anything, they will pay what they think the damage is minus your deductible. It's the BANK that would come after you for that. I'm pretty sure they'll leave you alone. IF they send a bill, then respond with a copy of your discharge. If it was a no-asset discharge, then you shouldn't have to deal with reopening the case or anything like that. I'd be willing to bet (a small amount, say $2 or so) that it won't get past this point. If it does, THEN I'd worry about it.

[malf1204]

His insurance company may have to pay but the Debtor will have to pay nothing. The loan was discharged. I have a discharged car loan that was not reaffirmed. If the car is struck by lightening tonight I will simply stop paying. The bank can repo the car and file an insurance claim but the amount of money they receive will be minus my deductible and they cannot force me to pay that because the loan was discharged. The bank lost their right to be paid for their collateral when the loan was discharged.

[sh9730]

SO, we ll see what happens now. My insurance company called and DENIED the claim from the lienholder based on the fact that they cannot prove when the damage occurred, therefore cannot confirm the policy was in force at that time.

We ll see if the bank contacts me now.....Im seeing there seems to be more people that say I am NOT liable since the loan was discharged.