Can Loan Company Come After Me For Loan if Collateral Car is Totaled?

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“I got a small loan from Fidelity National Loans in Mississippi. I used my car for collateral. The contract stated that if the car was totaled then the contract would be void. My car was wrecked in an accident on September 3, 2011 and my last payment was on August 19, 2011. I informed the company after that I faxed all info the state trooper gave me. They said it was not enough and they took me to court in February, 2012. I had to work so I didn’t attend. I am still receiving letters from them threatening to take me to court for the same case. They come to my home, call my job (I informed them I can’t receive calls and to stop) and they also harrass my references. I do not feel I owe on the loan. I’ve asked them to only contact me in writing, they don’t adhere. Can I sue them for harassment?”

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This has us perplexed, because we have never seen a contract which states that you can get out of it by destroying the subject of the contract, which is what the contract you describe would amount to.  Apparently, the loan company sees it the same way, as they are coming after you.  Even if the contract does read as you understand it to, you defaulted by not showing up for a court appearance, and so it is likely that the loan company has a judgement against you (which would be granted by the court when you failed to show up).

If the amount that you owe is substantial, you should consult with both an attorney in your area, and a consumer credit counseling service, to see what your options are.  On the other hand, if the amount that you owe is relatively small, it will likely be cheaper to pay it off than to deal with the legal issues that you are facing.

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Author: House Attorney

A house attorney has answered this question.