What to do about car loan debt after a totaled car without full coverage
When a car is totaled without full coverage, partial insurance policies only pay for the other party's vehicle, leaving the owner stuck with a large remaining loan balance. This creates a situation where borrowers are left owing thousands of dollars on a vehicle they can no longer drive, leading them to question whether they should file for bankruptcy or try to negotiate lower payments.
What people tried
Every workaround mentioned in the threads below. We haven’t tested any of them — and nobody here is claiming they worked.
- 1Filing for bankruptcy
- 2Continuing to pay off the loan until graduation
- 3Stopping payments and waiting to negotiate a settlement or payment plan with collections
- 4Refinancing the remaining balance with a cheaper personal loan
In their words
Unedited, most upvoted first, each linked to the thread it came from.
“I was under my parents insurance which at the time was Allstate. My lender (carmax) only required that I had insurance didn’t matter if it was partial or full. The partial only paid out the other persons car not mine. And his insurance didn’t give me any thing aswell”source ↗
“At the beginning of the year I was in a car crash that totaled our car. We were already behind on it and the totaled payout was about half of what we owed.”source ↗
“We still have a lot of payments to go (Like $8000). Is it worth it to try and get the payments reduced to a more reasonable level?”source ↗