Credit Acceptance Corporation, a subprime auto lender, has agreed to wipe out the remaining balances on car loans held by more than 55,000 borrowers, with no claim form involved, under a settlement that New York Attorney General Letitia James valued at $700 million. The deal, announced on September 17, 2026, brings together 41 states and jurisdictions: 39 states, the District of Columbia and Hawaii’s Office of Consumer Protection.
The debt relief is due on or before November 2, 2026, the effective date written into the consent order. The settlement resolves claims that the lender pushed borrowers into loans built to fail, and it also sets aside money for restitution and for payments to the states.
How the $700 million is itemized, and why the pieces overshoot it
The New York attorney general’s office describes the deal as $700 million, including more than $630 million in debt relief, $60 million in restitution and $15.5 million in penalties. The same release says the automatic debt elimination reaches more than 55,000 consumers, about 2,500 of them in New York, and that New York’s own share is roughly $34 million.
Added together, the three pieces as stated come to more than $705 million, not $700 million. Connecticut’s parallel release gives a finer breakdown: $388 million in debt relief for borrowers whose cars were repossessed, $246 million for borrowers whose cars were not, and $60 million in cash restitution. Those three lines make $694 million in consumer relief, and Connecticut separately lists a payment of about $15 million to the state attorneys general. Neither release explains how the itemized pieces reconcile to the $700 million headline, so that figure is best read as the New York attorney general’s own total.
Which loans get automatic write-offs under the consent order
The consent order and judgment posted by the New York attorney general limits the debt relief to what it calls early defaulted accounts as of December 1, 2025. The loans must have been originated between November 1, 2015, and November 30, 2025. Accounts are covered when the borrower had a Credit Acceptance score below 56 and a payment-to-net-income ratio of at least 13 percent, and the order sorts them into two groups.
The first group is accounts where the vehicle was repossessed within 18 months of origination, with debt relief estimated at $388 million. The second group is accounts with the same score and income metrics where the vehicle was not repossessed and sold at auction by the company, estimated at $246 million. The order says Credit Acceptance must provide full debt relief in the form of a waiver on or before the effective date. Nothing in the order or in either press release asks a borrower to file a form or submit proof to receive the waiver.
The New York release also describes a forward-looking rule: for at-risk borrowers who default within 12 or 18 months and have their vehicles repossessed and sold, Credit Acceptance must forgive 95 percent of the debt and may collect only the remaining 5 percent. That term governs future accounts and is separate from the one-time write-off.
Why 39 states plus D.C. and Hawaii adds up to 41
The count in the title needs a careful reading, because Hawaii is itself a state. New York’s release describes a bipartisan group of 39 states and the District of Columbia, then names Hawaii separately, through the Office of Consumer Protection of the State of Hawaii. The arithmetic is 39 states plus D.C. plus Hawaii, or 41 participants. Counting Hawaii as the state it is, the deal covers 40 states and the District of Columbia.
The Connecticut attorney general’s release also gives 41 and names the executive committee: Maryland, Arkansas, California, Illinois, Minnesota and New Jersey. Alongside New York, which pursued its own case, the other participants it lists are Alabama, Alaska, Arizona, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Indiana, Kentucky, Louisiana, Maine, Michigan, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington and Wisconsin.
How Credit Acceptance must tell account holders their loans are closed
The New York press release does not say how borrowers will be told. The consent order does: Credit Acceptance must notify each account holder by letter, email or text that the account has been closed and that no further payments are owed. Connecticut’s release likewise says eligible consumers will be notified by the company. The sources read do not say when those notices go out beyond the November 2, 2026 effective date, and none describes a fee, an intermediary or a deadline for borrowers to respond.
Restitution follows a different route. Under the order, the $60 million is paid into a trust account, and the multistate executive committee determines who receives it and how much. Connecticut’s release says restitution recipients will be contacted by a claims administrator.
What the attorneys general say Credit Acceptance did
The states’ allegations are specific, and the sources read describe no court finding on them. New York’s release says the lender pushed borrowers into unaffordable loans carrying interest rates averaging above 38 percent, with some exceeding 100 percent, concealed loan costs while marketing affordable borrowing, and used dealer arrangements that guaranteed profits whatever happened to the borrower. It also says dealers sold add-on products and insurance without clear disclosure, and that the lender packaged the loans as securities with false statements about legal compliance.
“CAC preyed on consumers in New York and across the nation with false promises of affordable loans, only to exploit them with outrageous interest rates that ruined their credit and cost them their cars,” Attorney General James said in the release. Connecticut Attorney General William Tong said the lender “profited off risky loans destined to fail, padded with worthless services.”
The consent order fixes the mechanics on paper: two groups of accounts, a loan window ending November 30, 2025, a waiver due by November 2, 2026, and a notice by letter, email or text. The more than 55,000 borrowers figure comes from the New York attorney general’s release, and the order itself states no consumer total.
Automatic loan write-offs and the notice that confirms them
Relief under the Credit Acceptance settlement is automatic, so no borrower files a claim and no claim deadline runs. The gap the news leaves is practical: a borrower learns the outcome through a notice from the lender by letter, email or text, and has to read that notice against the settlement’s own terms to confirm which group an account falls in.
The Settlement & Refund Recovery System is a 36-page guide that includes the four-date rule for reading a settlement notice and the scam-proof rules, along with a claim log and payment tracker.
See the four-date rule for reading a settlement notice →
This article was drafted with AI assistance, and its figures and dates were checked against the cited attorney general releases and the consent order.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
