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If I'm in a wreck and I owe more than my car is worth, what do I do?

I owe more on my car loan than what my car is worth, what do I do?

Too often a client is what we call “upside-down” on their loan — the loan is more than what the car is worth. Unfortunately, the client may get in a collision, and then the insurance company is only obligated to pay the value of the car, and then the client still can’t pay off the note.

The question is what do you do? Unfortunately, there are no good answers in these types of situations. Your best bet is to go back to your lender and try to re-negotiate or engage in some other negotiation, where they may be able to help you out. But unfortunately, the insurance company isn’t obligated to pay you the full value of the loan and is only obligated to pay the value of the car, which doesn’t help you get out from under the note.

As always, these are based on Texas law. If you need the name of a lawyer in another state, let us know, and we can probably help find someone for you.

Holding Wrongdoers Accountable

Learn more about car insurance in Texas and what you can do to avoid common accident claim mistakes with these free resources.


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