In Houston, they are saying 50,000 cars could be destroyed due to the floods. If your car gets destroyed due to a natural disaster and you still owe money on it (its not paid off), and the insurance gives you nothing or very little, do the banks have any leniency or compassion or do you owe every penny regardless? If you stopped paying on a loan, theres nothing for them to repossess so I would suspect you would get sued or have some type of a judgement against you until it is paid off.

 

you took on the debt.



when you take a loan you basically say "yeah lemme borrow some money, if i dont pay it back, here's the collateral for you to take back."



if there's nothing to take back, then you still owe the money for it.



if you didnt have the proper insurance it's on you, not the bank.

 

If you're saying you don't have GAP insurance to cover the difference in the car's value and the debt owed, then that's what you'll get sued for. Yes, it will most certainly go on your credit.



You should fight to get the most payout from the insurance. If there is a gap left, you could always get a personal loan to pay the difference, then make small payments on that.

 

A friend of mine lost control of a Mustang and put it in a lake (went over a bump that at normal speed wasn't an issue...). He was paying an extra 7k on a car he didn't have because of no GAP insurance. As new as it was - I think he got lucky.