I'd add dear ol' bro' to any lawsuit. Not that I expect that either of them have the money to pay you back.
Are the police seeking charges against either of the people involved?
I also could see the lender trying to convince a court not to discharge the loan based upon allegations of your intentional misconduct or complicity. I expect that per your loan contract you represented that you were purchasing the car for your own use and also that you committed to buying and maintaining insurance on the vehicle. It would make a lot of sense to talk your situation over with a bankruptcy lawyer.

