GAP Insurance Problem - Help!
December 29, 2008 8:45 AM   Subscribe

My boyfriend Brett recently ran into a problem with GAP insurance that he purchased, and we are looking for a little direction to see where he can go from here. It looks as though he was defrauded by the car dealership that he purchased his car from, as well as potentially by the GAP provider, but the car dealership is now in bankruptcy, no one will return our calls, and he is stuck with $3200 in debt that he can't afford.

Here's the detailed story. In April 2007, Brett purchased a car from a used car dealership in Spokane, WA called Town and Country Auto, Inc. He didn't have money for a down payment, but really needed a more flexible mode of transportation (other than walking or the bus) as he was picking up a second job and planned on moving away from the area in the next several months. Brett realized that GAP insurance (to cover the difference should something happen to the car while he was upside down on the loan) would be a good idea for him since he was rolling everything (down payment, taxes, warranty, etc) into the loan for the car. The total came to around $8,000, which he financed with Wells Fargo.

A few months later he moved to Maryland. In November 2008, Brett got into an accident with the car. Though the damage wasn't huge, the insurance company decided the car wasn't worth enough to repair it and declared it totaled. At this point the loan was down to $5500, and they declared the value of the car to be $2700 with a $500 deductible, leaving Brett with a total of $3300 to pay off to Wells Fargo. Once things settled down, Brett called Wells Fargo to inquire about how the GAP payoff should work, and they told him to call the GAP insurer to file a claim.

This is where it got strange.

Brett calls Beacon Industries, Inc and tries to file a claim. They ask him for a policy number, which he can't find anywhere in his paperwork (though he does have a copy of the GAP form that was typed up with Beacon's logo on it, as well as the receipt from the dealership that shows he paid $400 for GAP). They then attempt to search under first the VIN, then his name, but cannot find him in their system. At this point they tell him to consult the dealership. In the meantime, Brett calls Wells Fargo and asks them to fax a copy of the contract directly to Beacon, which shows both the GAP form and the itemized receipt from the dealership.

Brett calls Town and Country Auto, only to find that they've filed for bankruptcy. After many calls and an in-person inquiry at the office (during a well-timed visit back to WA for the holidays), it sounds as though Town and Country Auto never sent in the GAP paperwork to Beacon. The man we spoke with identified himself as Don Hess (who claimed on the phone not to have anything to do with Town and Country Auto, then claimed in person to be a contractor hired by the company, but is clearly listed by the BBB as the VP of Town and Country Auto). Don attempted to convince us to take Beacon to small claims court, since Brett would be unlikely to get anything from Town and Country Auto in bankruptcy. Don said that Town and Country Auto could be considered an authorized "agent" of Beacon and thus Beacon would still be responsible for Brett's GAP claim (and would have to go to Town And Country Auto for the $400 they never received). We were also able to get the number for the lawyer who is supposedly handling the bankruptcy, who we called and have yet to receive a call back from.

I did a little research on Town and Country Auto and called the Eastern District of Washington's Bankruptcy Court office. They couldn't find any record of Town and Country filing for bankruptcy. The person at the court office suggested that they might have filed under a different company name since they are incorporated, but when I inquired over the phone at the Town and Country Auto office, they refused to tell me what name it was filed under. When I had the opportunity to inquire in person, they said it should be filed under their own name (no incorporation).

Doing a little more research, it seems that Beacon Industries Inc. is not without its own problems. It has an F rating with the BBB and (according to the internet) a history of ignoring, losing, and underpaying claims with GAP. See this article. This information is troubling, and seems to reflect our situation. After Wells Fargo faxed Beacon copies of Brett's paperwork, Brett has called Beacon to follow up numerous times, but no one will return his calls.

So, Brett still owes $3200 to Wells Fargo, is already pretty strapped financially (and recently started college again in order to fix that problem for the longer term but will have to cut back on working hours in the meantime), and everyone is pointing the finger at someone else. In the short term we've been carpooling, but due to work and school schedules he will most likely have to get another car in the next few months, and since he doesn't want to take on more debt, his plan is to have at least a little money saved and hopefully pay for a cheap-ish "beater" car in cash. However, with this additional debt and his lessened hours at work, this will be extremely difficult.

It seems pretty clearly that the fault of the non-filed GAP paperwork lies with Town and Country, but if they are truly in bankruptcy (can this be verified somehow?) then the chance of Brett getting any money is extremely small. Beacon could potentially be held accountable as Don Hess claimed, but they won't return any more phone calls and clearly have a pretty shady reputation.

What should we do? Is there any government agency to turn to? Call a lawyer? Sue someone in small claims? Try to get the debt rolled up in Town and Country's bankruptcy (assuming we can finally get in touch with their lawyer)? The worst thing Brett has done in this situation is trust the wrong people, and this is debt he truly can't afford.
posted by etherealclarity to Law & Government (7 answers total)
I can't help with your base problem and I'm sorry you're going through the difficulty. However, just a quick cautionary note that you may want to think twice about posting on the internet your boyfriend's name, the names of the businesses he is in legal conflict with, and your own name in your profile. What happens on the web stays on the web, and if lawyers or other representatives for either side of this conflict do a web search, all of this information and your question are now accessible to the whole planet. Just a word to the wise.
posted by cuddles.mcsnuggy at 9:32 AM on December 29, 2008 [1 favorite]

Call the Washington attorney general's office. They may be interested in investigating this company's business practice and can advise you on how to proceed.
posted by electroboy at 9:36 AM on December 29, 2008

Calling a lawyer for legal advice is often a good idea. :)
posted by Solomon at 9:37 AM on December 29, 2008

Wow, I had a problem with my GAP a while back. I had a jeep that got totaled. I had to fight tooth and nail for them to give me anything. GAP has no problem accepting your money but when it comes to pay up.... Also from 8k down to 3k?!?!? That is a lot of lost value! I would be leaving brown paper bags full of something on that dealer's door step for that one!!! Anyways I would first:

1 - Get everything together. Receipts, statements, loan papers, etc. Look for numbers, IDs, anything on them.

2 - Organize it! Make sure that you everything written down on a separate piece of paper. Like a cliff note for your claim.

3 - Try to contact your GAP insurance one more time with all of the information. If they still give you a hard time....

4 - Go to a Lawyer. More than likely they will give you a free consult. Also more than likely they will do your property claim for free and then want a piece of your private settlement. If you were at fault then just go for the free legal advice.

5 - Don't pay Wells Fargo anything! You don't own the car, you have GAP, You shouldn't have to pay for it. Tell Wells Fargo what is going on. I did not make a jeep payment for 3 months. Sure they were pissed about it but I'm not paying for something I don't own.

6 - If you cannot talk them into paying what they legally owe you, you will need to weigh your options. Is court worth getting 3,000 bucks from GAP?

I know it sucks but with a grade of F from BBB you are going to have a hard time getting a dime out of them.

PM me if you have anymore questions. Good luck!
posted by Mastercheddaar at 9:43 AM on December 29, 2008

Best answer: It looks like a Town & Country Auto, Inc. filed for bankrtupcy in Washington State on November 21 (case no 08-04879-PCW7, E.D. Wash). The case was filed under chapter 7 so the likelihood of there being any payout for unsecured creditors is slim (the Schedules show assets of $520 and liabilities of $1,163,695.34).

So as it stands with the dealership, your boyfriend may have a claim in the bankrtupcy, but that is likely not worth much (or anything).

A claim against Beacon is an uphill one. Most insurance policies do not go effective until the premium is received, so if the dealership pocketed it there is no policy. There may be claims against the dealership for not making the payment, but they are bankrupt. You/BF may want to try to pursue it in a justice/small claims court because the amount is not too large: for the same reason you will have trouble finding an attorney to puruse the matter for you (the amount in controversey is too small), it may make sense for the insurer to settle rather than pay a lawyer to defend. (Your lack of a policy is a problem, but maybe your friend Mr. Hess can help find/re-create it). Caveat: nuisance value is not as high as it once was and you will likely not be made whole.

Tough situation. It seems like there are some bad guys, none of whom are your boyfriend.
posted by mr_felix_t_cat at 9:46 AM on December 29, 2008

Best answer: I work in auto collections for a major, major bank and deal specifically with this kind of crap all the time. My suggestions:

1. Contact the state AG and get an attorney if your boyfriend really wants to walk away from this clean because this is going to take a long, long time to clean up and at some point, either your boyfriend is going to get that new car and be totally unable to make the payments on this old loan or he's going to get frustrated about all of this (rightfully so) and stop making the payments. He doesn't want this stuff on his credit report, so get the law involved, you know?

2. He needs to call Wells Fargo ASAP and request to speak with an account manager that he can work with specifically from here on out. Otherwise, this will just end up getting bounced from individual to individual, especially if it ends up in collections. Your man needs to request an account manager and let them know all of this. He needs to fax over his gap insurance information and anything you guys have that show he was supposed to have GAP coverage. I might even include the BK info you have on the dealer, but ask the AM at Wells first. Ask about extensions, deferments, and any other programs that he might qualify for while you guys work this out. Ask them if they have a gap dept, a fraud dept, or a general insurance problems dept. Once you get an AM, it's their job to make sure your loan is resolved, so all the stuff I'm writing now they'll probably take care of for you anyways without you having to ask.

3. Finally, and this is a last ditch thing, but maybe there's, like, a local television '3 on your side' type deal where you could contact the media and let them know what's going on. It might help. *shrugs* It helped my wife a few years ago when she had some problems getting some money she was owed by a company that claimed they were filing BK. Just an idea. Good luck!
posted by Bageena at 2:17 PM on December 29, 2008

Response by poster: cuddles.mcsnuggy: thanks for the advice... we were trying to get this on the consumerist so we were prepared for it to be public.

mr_felix_t_cat: Thanks for looking up the bankruptcy claim... when I looked it up they must have JUST filed or were still in the process of filing, which explains why they had no record of it at the time.

Thanks everyone for the advice... hopefully there will be some kind of resolution from this.
posted by etherealclarity at 6:37 AM on December 30, 2008

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