What to do if I sold a used vehicle to my son last year but before he was able to change the title to his name he was in a car accident?

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What to do if I sold a used vehicle to my son last year but before he was able to change the title to his name he was in a car accident?

He was at fault and had no liability insurance. The victim’s insurer paid for the damages to the other vehicle since my son had no insurance but now it is trying to sue me and my son for the damages it paid for. It is threatening to have our driver’s licenses suspended if we don’t pay $3900. However, we don’t have that kind of money and my son is young and struggling to make ends meet. He is paying $450 a month for 2 months but now has barely any money left to pay his rent, utilities and food for the month. If we don’t pay can it really get or licenses suspended?

Asked on October 17, 2013 under Accident Law, Texas

Answers:

S.L,. Member, California Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

Since the title to the vehicle was not transferred to your son prior to the accident, you are still listed as the registered owner which is why you are liable for the accident and have been sued by the insurance company.

You and your son (if he is at least eighteen) might want to consider filing bankruptcy since you can't afford to pay the amount demanded by the insurance company.  Your income will deetermine if you are eligible to file Chapter 7.  A Chapter 7 bankruptcy is straight liquidation which eliminates certain types of debts.  If you are not eligible to file Chapter 7, you can file Chapter 13; however, Chapter 13 requires a plan (budget) for repayment of creditors.

As for the insurance company having your license and your son's license suspended, that may occur after the insurance company notifies the Department of Motor Vehicles that you and your son were uninsured.  The laws vary from state to state, but license suspension for not having auto insurance is the applicable penalty in some states.  If your license and your son's license are suspended, reinstatement will occur when proof of insurance is provided.

Again with regard to the $3900, bankruptcy is your best option.  If you don't file bankruptcy and the insurance company gets a court judgment against you and your son, then the insurance company will seek to enforce the judgment with a wage garnishment.  Filing bankruptcy will stop a wage garnishment.


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