Will the bank where we have a car loan get the money from our insurance company if my bankruptcy was finalized? 18 Answers as of April 08, 2014

My bankruptcy was final in 2011. We filed on PNC Bank for a car loan. We did not resign papers with them and when you pull up our credit report it shows a zero balance with PNC. We have still been making our car payments to them even though it says zero balance. We recently totaled the car and my question is: Does the money that we get from the insurance company go to PNC or us? The insurance say PNC but with a zero balance that they have already written off, well I guess I am just confused.

Ask a Local Attorney. 100% Anonymous. Free Answers.

Free Case Evaluation by a Local Lawyer: Click here
EDWARD P RUSSELL | EDWARD P RUSSELL
Since you did not sign an agreement to keep the debt on the car that debt is discharged by the bankruptcy but the lien in favor of PNC survives the bankruptcy. As a result PNC is entitled to be paid from the insurance proceeds up to the value of its lien which should be the balance remaining on the loan.
Answer Applies to: Minnesota
Replied: 4/8/2014
Rhymer Law Firm
Rhymer Law Firm | William Rhymer
If the insurance proceeds are more than the value of the vehicle, you should get the excess. If more was owed than the amount of the insurance, then assuming the bank had a valid lien recorded, you will not get any refund. A write off doesn't mean that they cannot take the money. It would just mean they would have to pay taxes on what they received.
Answer Applies to: Georgia
Replied: 4/4/2014
Ronald K. Nims LLC | Ronald K. Nims
When you did your Chapter 7 bankruptcy and didn't reaffirm the car loan, PNC kept its lien on the car. Your payments over the last 3 years have reduced the amount of that lien but apparently not down to zero. When the car was totaled, the insurance company is required to check the amount of the lien at PNC, if the lien is bigger than the insurance payment, PNC will get the whole amount. If the insurance check is bigger than PNC's lien, PNC will get their money first and you'll get what left. PNC didn't write off your loan, it was discharged in bankruptcy, PNC could have repo'ed the car at any time. For whatever reason, they didn't bother. But that doesn't mean their lien on the car magically disappeared, you never could have sold the car without paying off the lien and now that the insurance company is handing them money - they'll take it.
Answer Applies to: Ohio
Replied: 4/4/2014
Detroit Lawyers, PLLC
Detroit Lawyers, PLLC | Nick Best
It appears the bank allowed you to 'pay and drive'. In this case, you weren't on the hook for any of the payments owed, but they retain their security interest in the collateral and are entitled to the insurance proceeds accounting for any equity you have in the vehicle.
Answer Applies to: Michigan
Replied: 4/4/2014
Janet A. Lawson Bankruptcy Attorney
Janet A. Lawson Bankruptcy Attorney | Janet Lawson
The bank gets the money, a write off is a tax event for the lender. - bank has a secured interest in the car. The credit report only reflects your personal liability - the secured interest remains.
Answer Applies to: California
Replied: 4/4/2014
    Law Offices of Linda Rose Fessler | Linda Fessler
    The insurance company gets it be cause it is a secured loan, secured by the car. Even though the bankruptcy prevents any deficiency if the insurance does not pay enough to pay off what is still owing,it does not preclude them from getting the insurance money. Now if your payments since BK are 3000 dollars and you only owed 2000, you should get the check. If you only paid 1000 and the insurance check was for 3000, you should get 1000 of the check. But chances are that is not the case. Until you are sure, do not sign the release and the check will not issue.
    Answer Applies to: California
    Replied: 4/4/2014
    GARCIA & GONZALES, P.C.
    GARCIA & GONZALES, P.C. | Richard N. Gonzales
    Insurance proceeds goes to the car lienholder (the bank).
    Answer Applies to: Colorado
    Replied: 4/4/2014
    Idaho Bankruptcy Law | Paul Ross
    Creditors are not allowed to report on your credit for discharged debts. You apparently did not reaffirm the debt so nothing will show on your credit. But the lien against the vehicle continues despite the bankruptcy discharge. As such, you will have to pay the contract in full to have the lien removed. Until then, the insurance money will go to pay off the lien on the vehicle and anything additional will then come to you.
    Answer Applies to: Idaho
    Replied: 4/4/2014
    Stephens Gourley & Bywater | David A. Stephens
    Because the bank is an insured on the loan, they would get the insurance money up to the amount of the loan.
    Answer Applies to: Nevada
    Replied: 4/4/2014
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    I suggest you read your insurance policy. Typically the policy proceeds will be paid to the party holding the title to the vehicle, which is usually the company financing the purchase of the vehicle. Until a vehicle loan is paid off, the lender, not you, is the legal owner of the vehicle & entitled to be compensated for their ownership interest.
    Answer Applies to: Nevada
    Replied: 4/4/2014
    Paul Stuber, Attorney at Law
    Paul Stuber, Attorney at Law | Paul Stuber
    The bank still had a security position on the car that survived the bankruptcy and most likely by contract also on the insurance.
    Answer Applies to: Colorado
    Replied: 4/4/2014
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    They are still the lien holder if their name is on title so you would have to get PNC to give you a satisfaction of the lien to record at dept of motor vehicles. Otherwise you may have to reopen your bankruptcy case .
    Answer Applies to: New York
    Replied: 4/4/2014
    Steele, George, Schofield & Ramos, LLP
    Steele, George, Schofield & Ramos, LLP | Alan E. Ramos
    After your discharge, you have no personal liability to the bank. However, the bank still has a lien on the car and is the proper beneficiary of the insurance proceeds.
    Answer Applies to: California
    Replied: 4/3/2014
    Law Offices of Eric W. I. Anglin
    Law Offices of Eric W. I. Anglin | Eric W. I. Anglin
    As long as PNC has a lien on the vehicle, it will be entitled to the proceeds up to the balance of the loan. You cannot rely on the credit report for the loan balance. You need to speak with the lender.
    Answer Applies to: Indiana
    Replied: 4/3/2014
    Goldsmith & Guymon
    Goldsmith & Guymon | Marjorie Guymon
    The money goes to PNC. They are still secured in the car.
    Answer Applies to: Nevada
    Replied: 4/3/2014
    Law Offices of Robert P. Taylor
    Law Offices of Robert P. Taylor | Robert P. Taylor
    Pnc.
    Answer Applies to: California
    Replied: 4/4/2014
    Law Office of Lynnmarie A. Johnson
    Law Office of Lynnmarie A. Johnson | Lynnmarie Johnson
    It would go to PNC, you discharged the loan, but the security(meaning the car) is still held be PNC. It might have been worth to come take the car even though you didn't reaffirm it, but I am sure they will be there for the check. The hard part is going to be coming up with you actual balance, but generally cars are worth less than we owe, so this might not even be a concern.
    Answer Applies to: Michigan
    Replied: 4/3/2014
    Law Office of Shawn N. Wright | Shawn N. Wright
    Yes, your insurance policy would presumably have listed PNC Bank as a loss payee on your auto insurance policy. You did not reaffirm the loan when you filed your bankruptcy, so the loan simply did not appear on your credit report anymore, as you were not personally responsible for the payments. In other words, let's say that you had defaulted on the loan and let the car be repossessed. Well, in that event, PNC Bank wouldn't have been able to sue you for the balance of the loan. Nevertheless, PNC Bank was still collecting on the car loan and they still had your title, etc. So, the bottom line is that yes, I am presuming that your insurance company will pay off PNC's loan, and if there is any gap in amount owed, then you will not be responsible.
    Answer Applies to: Pennsylvania
    Replied: 4/3/2014
Click to View More Answers:
12 3 4 Free Legal QuestionsConnect with a local attorney