My question involves an auto loan or repossession in the State of: Maryland
I was in an accident on July 1st in my wife's car. The car was declared a total loss about one week later. The check sent to the bank by the auto insurance company was about $4000 less than the total amount of the loan, but we have GAP insurance. My wife initiated the process with the GAP company the day the car was determined to be a total loss. We have sent the necessary information to the GAP insurance company, but they said that it will take some time to review.
The bank is saying that since the check from the insurance company was issued this month, the loan will be "charged off" unless the remaining balance is paid by July 31st. My wife has never been late on a payment and she does not want a Charge Off to show up on her credit report.
Can the bank charge off a loan this fast?
If we pay the remaining balance would the GAP insurance company have to reimburse us?
When my wife asked the GAP company about the possibility of us paying the balance of the loan (with a credit card) the response was that we would have to send them the letter from the bank stating that the balance had been paid and they would "see what they could do".