Cashed Insurance Check Picked Up Car

[T2P]

Hi all,

So I would like some opinions on this:

Our auto insurance company sent us a check for approx $3000 which my wife promptly cashed (total repairs ended up being approx $6000). After we got our car repaired the auto body shop gave us our car back after we payed our deductible. The insurance company payed the auto body shop for repairs minus the amount they sent us ($3000). Of course the auto body shop is now looking at us to receive the full payment.

The twist here is I'm filing for bankruptcy and don't have the money to pay them. What is the auto body's course of action here? Is it to sue me for the difference? Do they have a case? Or can I write this off in my bankruptcy?

Thanks for any answers.

 

[Josh]

In most states they can put a lien on the vehicle or sue you.

Yes, they have a case; you owe them $3,000.

 

[BlockO]

I'm wondering why the insurance company sent you $3K in the first place instead of paying it all to the body shop?

 

[djs]

In the end, they will file a mechanics lien on the car and ultimately will own it. Its best to pay them, even in payments if you have to.

You can include it in the bankruptcy, but I think the mechanics lien will survive on the car, you'll still owe them the money.

Since this was recent, my understanding is bankruptcy courts won't look favorably on this either. You knew the money was for the car repair and though I understand you needed it at the moment, it already had a purpose. Your bankruptcy attorney can answer this question the best, but I would assume it will be hard to dismiss this debt.

Dan

 

[Josh]

I'm wondering why the insurance company sent you $3K in the first place instead of paying it all to the body shop?

It's actually not been uncommon in my experience. They cut you a check for the estimate, if/when that's not enough they pay the balance or you just take the check and enjoy it. It's how I've seen claims handled in NY and how I've seen them handled in VA.

 

[BlockO]

It's actually not been uncommon in my experience. They cut you a check for the estimate, if/when that's not enough they pay the balance or you just take the check and enjoy it. It's how I've seen claims handled in NY and how I've seen them handled in VA.

I know it's common. but I usually see it happen with smaller claims than this (usually minor fender benders).