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Negative Equity in a total loss situation

by Gordon
(Mill Creek, Washington)

Total loss of RV

Total loss of RV

My motorhome was damaged by a fire in an adjacent vehicle. My insurance company decided it was a total loss and offered me a fraction of what I owed.

The motorhome is on a 15 year loan (7 years into the loan). I did raise the right of appraisal clause and managed to get much more from the insurance company, but I still have an $7600 left on my loan after their pay out.

Do you have any tips how I can negotiate with the lender to "write off" that amount? We will have paid back $51000 on a $40000 loan, it does seem unfair that we should be doubly penalized, we no longer have the motorhome and yet we still have the debt.

Can we sue the person who caused the fire? Can we sue his insurance company?


Gordon & Peggy


Hello Gordon & Peggy,

You have several questions here.

1. The fact that you paid more already than what you borrowed is not a good argument. It's the terms you agreed to when you purchase the motorhome. However, you can try to use it to show them that they already recoup their cost and then some. They might listen to you but do not have to. You are on their hands completely.

Maybe you can try talking to them about bankruptcy; they may take a lesser amount in settlement than what you owe. They know if you were to file chapter seven, the would lose their rights. However, even if they write down the debt, it may reflect poorly in your credit score.

2. Can you sue the person who cased the fire? You can sue anyone for anything. The question is, can you be successful? This is a very complex question without more facts about the fire. If this was arson (fire with intent to burn), then of course, but if this was negligence or an accident, it's questionable. Talk to lawyer.

3. Again, you can sue anyone for anything, however, the insurance company did not case the fire. They are not "personally" liable to you. Talk to lawyer.

Good Luck,
Auto Insurance Claim Advice

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