What to do about my totaled car and being sued?

Legal
1

So two years ago, my boyfriend and I had a car I co-signed with him. The car was parked and got hit. It was totaled, and the other driver was at fault. I was supposed to get $7k from the insurance, and GAP insurance was supposed to cover the rest of the loan. I only had the car for six months.

I stopped making payments, thinking the insurance and GAP would handle it. Now, I just found out someone tried to serve me papers, and I think the loan company (Ally Financial) is suing me. My boyfriend says he’ll take full responsibility, but I’m not sure that’s even possible.

I’m super nervous and don’t know what to do. Any advice?

2

Your main issue was stopping payments. Until the loan is officially paid off, you’re still responsible for making payments, even if the car is gone. The insurance and GAP process doesn’t move as quickly as you might expect.

Here’s how it’s supposed to work:

  1. The car gets totaled.
  2. You keep making payments as usual.
  3. Insurance determines the car’s value and pays that amount (let’s say $7k).
  4. GAP covers the rest of the loan (let’s say the loan was $10k, so GAP pays $3k).
  5. If you’ve overpaid while waiting for this process, the bank reimburses you.

You’ll need to push to get your claim settled. Then, try contacting Ally and explain the situation. They might be willing to work with you, but it’s going to be tough since the payments stopped.

3

@San
Two years and it’s not settled? What’s the full story? Something seems off here.

4

Zen said:
@San
Two years and it’s not settled? What’s the full story? Something seems off here.

Exactly. When it started dragging on, I’d have gone through my own insurance and let them deal with the mess.

5

@Neve
The thing is, both the other driver’s insurance and mine are Geico. So it’s going through them from both sides.

6

Zen said:
@San
Two years and it’s not settled? What’s the full story? Something seems off here.

It was a 4-car accident. The driver hit my parked car, which hit the car in front of it, and so on.

7

@Asa
Insurance says all parties need to agree before they can do anything. It feels like they’re stalling, but is that really how it works?

8

Asa said:
@Asa
Insurance says all parties need to agree before they can do anything. It feels like they’re stalling, but is that really how it works?

Unfortunately, yes, that’s how it works. You should have filed through your own collision coverage. It would’ve been resolved quicker, and you wouldn’t be in this mess. Now, you’ll need to deal with the lawsuit. If your boyfriend wants to help pay, that’s great, but it’s still going to affect your credit.

9

@Yun
Can my boyfriend take full responsibility and get my name off the loan? Or should I just contact the loan company and see if I can make payments now?

10

Asa said:
@Yun
Can my boyfriend take full responsibility and get my name off the loan? Or should I just contact the loan company and see if I can make payments now?

You can’t just take your name off the loan until it’s fully paid. If the lender is already suing you, you’ll need to deal with that. Did the lienholder file the suit, or did they sell the debt to collections?

11

@Yun
I don’t know yet. I wasn’t home when they tried to serve me papers, but I’m guessing it’s about the car. I’m waiting to see what the papers say, but I’m so stressed.

12

Asa said:
@Yun
I don’t know yet. I wasn’t home when they tried to serve me papers, but I’m guessing it’s about the car. I’m waiting to see what the papers say, but I’m so stressed.

Wait, you’ve only had the car for six months, but this accident was two years ago? How is this still dragging on?

13

@Yun
It’s because of the 4-car involvement. Geico says all the parties have to come to an agreement first.

14

Asa said:
@Yun
It’s because of the 4-car involvement. Geico says all the parties have to come to an agreement first.

If Geico has been dragging this out for two years, you should have escalated the case with them. This is way too long to wait.

15

@San
Do I contact Ally to try and work something out, or do I just have to handle this in court now?

16

Stopping payments was a mistake. If they’ve filed a lawsuit, it’s probably too late to avoid court. The judge will issue a ruling, and you’ll have to pay.

17

Marlow said:
Stopping payments was a mistake. If they’ve filed a lawsuit, it’s probably too late to avoid court. The judge will issue a ruling, and you’ll have to pay.

Even if I contact them now to try to sort it out?

18

@Asa
At this point, yes, it’s too late. You should’ve reached out as soon as this started.

19

What happened with the GAP coverage? Did they ever pay the loan company? When I had an accident, GAP paid within three months, and my loan provider let me delay payments in the meantime. Communication is key in these situations. If GAP hasn’t paid, you need to contact them right away and see if it’s still possible to file a claim.