Hello and thank you for allowing me the opportunity to assist you.
Please note that for legal reasons my answers are only intended to be general/educational information
rather than specific legal advice
. If you need specific legal advice, then you must consult with a local attorney in your jurisdiction.
I'm sorry to say that the lender will likely have a valid claim on the insurance proceeds for the unpaid balance of the loan. You must bear in mind that the bankruptcy discharge merely acts as a stay on the collection of any debt that is discharged (see Section 524
), but it does not eliminate the entire transaction by invalidating the contract. That is why the lien was still valid and could be enforced. Although the lender cannot sue you for repayment, it can claim that it has a lien in the insurance proceeds just as it had on the vehicle, and it could take action to enforce that lien. At the same time, you may not want to voluntarily offer to pay ... you may want to just stop making monthly payments and wait for them to make a claim on the insurance proceeds. It's possible that it will not do so.
I regret that my answer is generally unfavorable, but please understand that it would be unfair to you (and unprofessional of me) to provide you with anything less than a truthful response. With that in mind, I hope that you found value in my answer. If your concerns were not satisfactorily addressed, then feel free to let me know, as I will be happy to clarify my answer or help with your follow-up questions. In the meantime, please remember to click the green accept button
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