Don't Donate Your Car Or at Least Take PrecautionsOkay, this one doesn't have anything to do with trains, but I had to tell somebody. A few years ago, you could give an old car to a tax-exempt organization and take a charitable deduction equivalent to the "blue book" value of the car. In 2004, we had two old cars that weren't really worth fixing up, but were still driveable, and one was still in pretty good physical condition. We learned that the law would be changing shortly so that if you gave your car to a charity, you'd only be able to deduct what the charity got out of it. That is to say, if, in 2004, I donated a car with a $4000 blue book value, I could take a $4000 charitable deduction. Today, if I understand the law correctly, you can donate a car with a $4000 blue book value, and if the car sells at auction for $150, that's all you can take as a deduction. Plus you need to get additional paperwork from the charity specifying exactly how much money they got out of it, and some charities are not very good at following up on that kind of paperwork.
So, in 2004, I donated a a 1996 Chrysler Cirrus to a nationally known and apparently reputable charity. Later I donated a 1993 Buick Century to a similar group. The charity I gave the Buick to sent me a letter thanking me for donating a 1994 Buick. Okay, so the year was wrong, but that didn't seem important at the time.
On my next tax return, I put the Edmunds value of both cars (less several hundred dollars each for known problems) on my charitable deductions list. End of story, right? Wrong.
What follows is one of the "Twilight Zone" moments of my life, you know those moments when you wonder if you've stumbled into an alternate universe or something. (An earlier experience was the night earnest-sounding strangers kept calling me, insisting that they were related, and that my house was on fire - that was when I learned that there was another Paul Race in my town, whose number was unlisted. "No, I don't have an Aunt Alice, and my house isn't on fire.") In January, 2007, we received a letter from a law firm in Cleveland explaining that we were likely to be sued for damages resulting from an "uninsured driver" accident that occurred on July 16, 2006. The pertinent text follows:
Creditor: Westfield National Insurance Co., FKA Westfield Companies
Balance Due: $2859.94
Date of Loss: July 16, 2006
Please be advised that we have been retained concerning the above captioned claim for damages. An investigation into that accident determined that the vehicle you own was involved in a motor vehicle accident on the date listed above and that the driver of your vehicle caused the accident. Our client [Westfield] paid for the damages suffered as a direct result of the accident. The investigation revealed that the driver of your vehicle did not have appropriate insurance coverage as required by law. As a result, you may be liable for the damages that were caused.
If you believe the investigative results are in error, or would like to make arrangements to resolve this matter, please contact: [paralegal's name and contact number withheld]
Unless you, within thirty days after receipt of this notice, dispute the validity of this debt, or any portion thereof, the debt will be assumed to be valid by us. If you notify us in writing within the thirty-day period that the debt, or any portion thereof is disputed, we will obtain verification of the debt or judgment and a copy of such verification or judgment will be mailed to you by us. . . . .
In other words, we had thirty days to prove that we didn't owe the Westfield National Insurance Company (of whom we had never heard) the money in question, or this law firm was going to come after us for nearly three grand.
A Weekend to Worry
Of course the letter arrived about 5:00 on a Friday afternoon, so we couldn't do anything but stew about it all weekend. We also tried to remember where all of our family's drivers were on that particular date some six months earlier (could you?). We remembered that two of our daughters were in Washington DC during the week in question. We called them and asked if anything like an accident had happened to them on their trip to Washington. They said no. We called Metropolitan Insurance (our company) and asked if there was anything on any of our drivers' records from July, 2006. They said no. We asked them if any of our drivers' coverage had lapsed, even briefly, in 2006, and they said no.
Still in the Dark
On Monday I left a message for the paralegal specified in the letter. She got back to me and explained that since our car was involved in an accident in July, and the driver was uninsured, we owed the Westfield National Insurance company $2859.94. I asked who the driver was and she said she wasn't allowed to tell me. I asked which car was involved and she said she wasn't allowed to tell me. I asked where the accident occurred and she said she wasn't allowed to tell me. I asked for the name of their contact person at Westfield National Insurance, and she wasn't allowed to tell me. I asked the name of the supposed victim of the accident and she couldn't tell me. The only thing she could tell me was that we owed Westfield National Insurance Co., FKA Westfield Companies exactly $2859.94. Her firm was acting in a collections role, and, apparently, once a debt goes "into collections," the would-be collector has no responsibility to give the debtor any information they can use to try to weasel out of it (she put it nicer than that, but that was the gist). After all, debts never go into collection without the debtor receiving plenty of warning. So when I pretended I had no idea what was going on, I was just embarrassing myself. (People who know me well, know that I almost never do have any idea what's going on, but that's a different story - this time I really was in the dark.)
So I wasn't allowed to know anything about the supposed incident, but the burden of proof was on me to prove that it didn't happen. Forget Twilight Zone, this is Kafka stuff.
Yes I know my "rights" and that I could have gotten a lawyer who would have gotten to the bottom of this in a hurry, for about $3000. But I, frankly, should have a right not to be bullied in this way by a supposedly reputable insurance company and a supposedly reputable legal firm (who I am not mentioning because they've already proven a predisposition for intimidating innocent people).
There followed several days of telephone calls during which followed up every lead I could and I tried to worm information out of her. I told her that all of our drivers were insured during the time in question, and she said we must have let someone borrow the car who wasn't insured. I asked for the name of the driver involved, and she still couldn't tell me. I told her that two of our drivers were in Washington DC during the time of the accident and asked if the alleged accident took place in DC. She said, no, it was in Ohio. Where in Ohio? She finally admitted it was in Columbus, Ohio. Well that gave us something to go on. I went back to a 2006 calendar and saw that Shelia and I were both working (in Springfield, and Dayton, Ohio) on the day in question, so it couldn't have been either of us.
I passed this information on to the paralegal, and she said, that didn't matter, we must have loaned our car to the unlicensed driver who had caused the accident. I told her we only had three cars. Our daughters had one in DC, I had one in Dayton, and my wife had the other one in Springfield when the accident occurred. I asked her again which of those three cars had supposedly been involved in an accident in Columbus. She finally told me that I knew very well that it was the 1993 Buick Century.
Unravelling the WebYou could have knocked me over with a feather. I didn't know whether to laugh or cry. After several days of arguments and anxiety, I had learned that the vehicle involved was one I had given to a national charity some nineteen months before the accident. I told her so and she said, no, that's not possible; at the time of the accident, the Century was still registered in my wife's name.
I told her that there was no way we could be legally responsible for a vehicle we had given to a registered charity 19 months earlier, and she said we were because the State of Ohio thought it was still ours. I said, "Come on, you realize that your client has no case against us - you'll get laughed out of the courtroom if you try to sue." She said that this didn't matter, the "debt" was still considered to be "in collections" and her firm would sue us if we couldn't absolutely prove to them - soon - that we hadn't just loaned or given "Joe Smith" [not his real name] our car before the accident. "Joe who?" I asked. She said, "Are you telling me that you don't know Joe Smith?" "No, I don't know anybody by that name." I think it was finally starting to sink in that we were telling the truth, but she was insistent that the burden of proof was still ours. Why wouldn't I just write her firm a check for three grand and put the whole thing behind me? Forget Kafka, this is Seinfeld stuff. Or maybe Adam Sandler in the first part of Anger Management.
Asking the Charity for a HandWe went back through our files and found a very bad photocopy of the title after my wife had signed it over, with the notary's seal on it. We also found a letter thanking us for donating a 1994 Buick Century. Oops. The paralegal said that I could fax the information to her, but I knew that the blurry photocopy wouldn't fax properly. And having the wrong year on the "thank-you" letter wouldn't help much either. So Shelia called the charity. She reached a young man who seemed helpful, and somewhat apologetic that we had gotten into that position. "Jeff" (not his real name) found our file and offered to send us a better photocopy of the "signed-over" title, as well as a new "thank-you" letter with the right year for the car.
Shelia asked how it was possible for a car we had given to the charity to still be registered in her name 19 months later. Jeff said that he didn't know. They usually took those cars to an auction house. I know something about auctions that include 8-year-old cars because a friend of mine used to take me to them. Most of the real junkers go to "shade-tree" or "vacant-lot" dealers, who do as much business as possible "off the books."
As far as I can reconstruct, after Shelia officially signed over the car to the charity, using a notary on the charity's staff, the charity sent it to an auction house, the auction house "sold" it to a "shade-tree" car dealer, and the "dealer" had "sold" the car to "Joe Smith," or else to someone who sold or gave the car to "Joe Smith." And nobody had bothered to register the car with the State of Ohio - or to pay sales taxes, for that matter. For all we know, Shelia's "signed-over" title was in the glove compartment of the Century when it was invoved in an accident, four "owners" and nineteen months later!. If the car survived the accident, it may still be out there, still registered to Shelia. The Cirrus could still be out there somewhere with my "signed-over" title in the glove compartment, too. Could we be held liable for a criminal act, eventually, if either car is invoved in a hit-and-run or such? People who haven't gotten a $3000 collections notice out of nowhere may think I'm overreacting.
Wrapping UpWhen we got the better photocopy and the "thank-you" letter with the correct date, we faxed them to the legal firm. I called the paralegal several hours later and she said they hadn't "come through." Turns out there's only one fax in the office and incoming faxes are frequently misplaced. She eventually tracked them down.
I insisted that she send us a "follow-up" letter admitting that we had no liability in the matter. She said she couldn't do that until the partners signed off on it or something, so it would still be several days before they would let us know how they planned to resolve the matter. As though there was anything discuss. The way she said it implied that they might just go ahead and sue us anyway and take their chances in court. I was hoping that she'd sound at least a little apologetic for having run us through such a wringer for something that clearly wasn't our fault, but, if anything, she sounded a little disappointed that we had been able to "weasel out of it" after all. Then, in my last conversation with her, she said, "You know, I donated a car to [charity name withheld] a year ago, and there's no reason the exact same thing coudn't happen to me." Bingo.
We did get the letter, eventually, that absolved us of all responsibility in this matter, but, again, there was no hint of an apology.
Lessons LearnedIt turns out that for a charity to pass the original owner's signed-over title on when the car goes to an auction house is not only legal (or fairly legal), it's also a common practice. I listen to a local public radio station that is constantly requesting people to donate their cars to them, and I can't help wondering what, if any, safeguards they offer their donors.
If nothing else, ask the charity where the car will go next and get a good copy of the signed-over title and an accurate "thank-you" letter before the car leaves your driveway. Tell your insurance company what you've done immediately. Also, if you're ever subscribed to Car Fax for some other reason, enter the VIN of any car you've signed over just to see if it has legally changed hands since it left your possession. If a car you donated a year ago is still registered in your name, maybe it is time to contact the State Highway Patrol about it, or maybe your state sales tax people, who might like to know they've been "stiffed."
Yes, this sounds like the sort of thing that only happens to me or to people you read about, but, as the paralegal belatedly realized, it could happen to anybody, and not all charities take measures to reduce your risks. Donate your car if you wish, but don't assume that the car and its problems go away when you sign it over and they get it out of your driveway.
Best of luck, all. As always, your comments are welcome.
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