Legal Question in Credit and Debt Law in Georgia

You left out the most important parts of the story. What were the terms of the contract and did he default? There is obviously a reason lenders require insurance on their collateral.

Lenders always require car comprehensive insurance. Your nephew needs to read the finance agreement with the lender. There really is no excuse as to why your nephew did not have insurance. Its also a requirement of state law that he at least have liability insurance.

If the failure to get and maintain part car insurance is part of the deal, then your nephew has defaulted on the financing agreement just as much as if he failed to pay for the car and they can repo it. Once the car is repo'd, the lender has a right to do what is called "acceleration of the debt" which is to demand the full amount owed. Some lenders will let the debtor pay what is owed or in this case get the insurance. But some will not and there is no way to force them to do otherwise as the lending agreements usually allow them to accelerate the debt. However, see what the agreement says about default and acceleration of the debt just to make sure. The lender can also sell the car at an auto auction for less than what was owed and turn around and bill your nephew for the deficiency. So a repo is to be avoided if possible.

What is the vehicle worth? If the car is worth about what your nephew paid, Is your nephew a member of a credit union? If so, see if they will pay make the loan, pay off the car and hold a lien on the title instead. They are much better to deal with.

If not, have your nephew call and see what can be worked out but he is going to need to get insurance. Being young and having a repo is not going to be a good thing and I hope this can be avoided. If not, then your nephew needs to save his pennies and buy a used car that runs for cash and stay away from dealers. With a repo on his record, he may not be able to get favorable loan rates

Credit disability insurance? This is not car insurance. Credit disability is where on credit cards, for example, card issuers will promise to pay if the cardholder gets sick or loses his job. The card issuers or credit disability insurers charge way too much in premiums and never deliver what they are supposed to. This is JUNK.

With car insurers, the dealers also try to sell this junk. As with credit cards, the borrower pays a hefty premium and if he gets sick or dies, then the lender will pay off the car. However, I have learned the hard way through clients that if your nephew deferred a payment and then got sick or died, the insurer will only pay what is still left owing on the loan, minus any deferred amounts. Even worse, the deferred amounts will carry interest from the date of deferral and the whole sum will become due at the end of the loan or once the borrower died or got sick if he wanted to keep the car.

Bottom line - credit disability insurance is virtually worthless. Your nephew needs to get real liabilty and comprehensive car insurance, whether on this car or any other car he gets.

It is a crime for him to have the vehicle and not have insurance, and it violates his loan agreement (which he was supposed to read when he bought the car). That means repossession and in general it means (1) the car is gone (unless he pays it off) and (2) he will get sued later for a deficiency.

See a lawyer as he may need to go bankrupt to avoid the coming lawsuit.