Can finance company release a title indicaticating that car is paid off, then say they made a mistake and I still owe?

My car was stolen about 8 months ago. The insurance company called the finance company for the information. The finance company said the car was paid off and supplied the insurance company with a lien release for the title. The finance company just contacted meand said I still owe $1600 on the car. I asked why didn’t they tell the insurance company when they called finance company said it was an “oversight on their part”. Am I still responsible for the $1600 if they said it was paid off and released the title to insurance company?

Asked on December 6, 2011 under Bankruptcy Law, Missouri

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Good question. If you had no knowledge of any alleged error on monies owed on the car when the insurance carrier for you was negotiating with the finance company on the amount of the loan after your car was stolen and the finance company then gave a full release of the lien for title to the car, then you are not responsible for any further amount owed.

The mistake was a unilateral mistake by the lender and no one knew until much later about the mistake. You and your carrier relied on the information provided by the lender for the insurance pay out where the lender gave a full release. The lender needs to absorb the $1,600.00 supposed shortfall.


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