Do I have to pay my lender the money from insurance company after a total loss?

UPDATED: Oct 1, 2022

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Do I have to pay my lender the money from insurance company after a total loss?

My insurance company direct deposited me the
money from a total loss do I have to pay that to
my finance company and what are the legal
consequences if I dont?

Asked on January 25, 2019 under Accident Law, South Carolina


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

If you don't pay them they will sue you and win, getting an enforceable court judgment against you which will damage your credit and which they can use to garnish your wages or put a lien on any real estate you own, or to take money from your bank account. When you finance a car, you owe them the full amount on the agreement regardless of what happens to the car. If you don't pay them, you have violated the contract--the loan agreement is a contract--between you, so they can sue for breach of contract. Since there generally is no defense to your obligation to pay, they will win.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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