What should I do if I crashed my financed car only to discovermy insurance lapsed so my insurance will not pay for it?

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What should I do if I crashed my financed car only to discovermy insurance lapsed so my insurance will not pay for it?

he car is probably totaled or will take at least $10,000 to fix and I already have a loan on the car for $15,000. Is it best to call my financers and tell them I was in an accident? What is the conciquence if they repo a crashed car? What do you think is the best option?

Asked on January 10, 2015 under Accident Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

You are liable for the full remaining value of the loan, and if the car is totaled and so is valueless, the lender cannot recoup anything from repossessing the car. That means that the lender will seek the full amount of the loan from you directly--and if necessary, may sue you; and if they sue you and win, they could garnish your wages, levy on your bank account, execute on property you own, or otherwise seek to collect from you. Your obligation to them is to pay the loan, whether or not the car is intact--they will know something is wrong when you stop paying.


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