Consumer Law

Interesting Post On Allstate And Debt Collectors

By M. Stan Herring

This post by the California Debt Blog is fascinating - it involves Allstate, a collection agency, and an innocent consumer. The basic facts:

I have a client who sold a car. (I am not naming her, but she has given me permission to write about this.) A couple of days after the sale of the car, the new owner was in a car accident. He, of course, had no insurance and she had removed the car from her insurance, just as I recommend. Allstate insured the other party involved in the collision.

Allstate sent her a letter demanding payment after pulling up state DMV [Department of Motor Vehicles] records. Because of the short time frame between the sale and the collision, DMV still showed her as the owner. She provided the insurance adjuster with a copy of the DMV Transfer of Title that showed she had sold the car. The adjuster did not care and sent her to collections. A collection agency then called her.

She provided the collection company with another copy of the DMV Transfer of Title. The debt collector did not care either. Allstate retained an attorney from Los Angeles and sued her. I then got involved and sent a letter to the attorney with ANOTHER copy of the Transfer of Title. He told me that it was not evidence that she did not own the car. Of course, by then, the owner as in prison. My client owned a house so Allstate tried to get a settlement out of her. The lawsuit was for about $3,500.

Read the rest of the post to find out the very nice ending and, as Jonathon Stein says "Do not let the insurance company, or an attorney or a debt collector, bully you. If you do not owe the money, it is worth fighting it."

Full post as published by Alabama Consumer Blog on July 06, 2008 (boomark / email).