Credit Acceptance to Pay $700 Million in Debt Relief, Restitution and Penalties Under New York Consent Order

Credit Acceptance to Provide $700 Million in Debt Relief Under New York Consent Order Over Subprime Auto Loans

A federal judge in Manhattan entered a Consent Order and Judgment resolving the New York Attorney General's lawsuit against Credit Acceptance Corporation, requiring roughly $700 million in payments and debt cancellation for subprime auto loan borrowers nationwide.

Information last verified on September 21, 2026.

Jurisdiction scope: This order was entered by a federal court in the Southern District of New York in an action brought solely by the New York Attorney General, and it is governed by New York law. Its debt-relief provisions are not limited to New York residents, however. The qualifying account categories are defined by loan-level criteria (credit scoring, payment-to-income ratios, and repossession history) rather than by a borrower's state of residence, and a group of other state attorneys general share in the $15,500,000 Multistate Payment. The New York Attorney General's office has described the relief as reaching more than 55,000 consumers nationwide, including roughly 2,500 New Yorkers.

What Happened

The New York Attorney General's office sued Credit Acceptance Corporation, a Southfield, Michigan-based indirect auto finance company, in January 2023, alleging that its subprime lending and servicing practices violated federal and New York consumer protection law. The case was dismissed in June 2026 subject to a 60-day right to reopen after the parties told the court they had reached a settlement in principle. On September 17, 2026, the parties filed a joint letter asking the court to reopen the case and enter their negotiated consent order; the court reopened the case and, the same day, Judge Furman signed the Consent Order and Judgment as Document 100 on the docket.

The order is explicit about what it is not. It states that it "is made without trial or adjudication of any issue of fact or law or finding of liability of any kind," and a separate recital records that "Respondent denies any and all violations of law alleged by the New York Attorney General." The parties consented to entry of the order "for good cause shown," and the court separately recited that entry of the order "is in the public interest." Nothing in the document is a judicial finding that the company broke the law.

What the Order Requires

Monetary relief (Section III). The order lays out four separate money components, each tied to a specific paragraph:

• Paragraph 9 requires a $15,500,000 "Multistate Payment," divided among the members of a Multistate Executive Committee and a broader Multistate Working Group of state attorneys general and consumer protection offices, plus a reimbursement to the National Association of Attorneys General, in amounts the Executive Committee alone decides.
• Paragraph 10 requires a separate $60,000,000 "Settlement Payment" into a trust account controlled by a Settlement Administrator the Executive Committee selects. The order gives that committee "sole discretion concerning the Accountholders entitled to relief and the nature and amounts of such relief" from this fund, and it requires Credit Acceptance to hand over accountholder names, last known addresses, contact information, and account numbers so the administrator can locate them.
• Paragraph 11 requires full debt cancellation, on or before the Effective Date, for accountholders with an open "Early Defaulted Account" as of December 1, 2025, a category the order estimates is worth $388,000,000.
• Paragraph 12 requires the same full-balance waiver for accountholders with an open "Other Identified Early Defaulted Account" as of December 1, 2025, estimated at $246,000,000, and additionally requires Credit Acceptance to release any lien it holds on the vehicle's title and to deliver that title to the accountholder if the company has possession of it.

Under paragraph 8's definitions, an Early Defaulted Account is one where the borrower had a "Credit Acceptance Score" under 56 and a payment-to-income ratio ("PTNI") of 13% or higher at origination, and the vehicle was sold through a voluntary surrender or involuntary repossession within 18 months of origination, with the loan originated between November 1, 2015, and November 30, 2025. An Other Identified Early Defaulted Account uses the same score and PTNI thresholds but covers vehicles that were not repossessed and instead were sold at auction directly by Credit Acceptance, within the same origination window.

Reporting and collection obligations. Paragraph 14 requires Credit Acceptance to stop furnishing data on these paragraph 11 and 12 accounts to the credit bureaus and to send the three major bureaus a request to delete the associated trade lines outright, not just mark them paid or closed. Paragraph 15 bars the company from filing new collection lawsuits, engaging in any debt collection activity, or selling or transferring those accounts. Paragraph 16 requires direct written notice, by letter, email, or text, telling each covered accountholder that the account is closed, that no further payments are owed, that any lien has been released, and, notably, that the underlying debt "are the subject of a bona fide dispute" and that the relief is "a compromise of disputed debt," language the order requires even though it also disclaims any finding of liability. Paragraph 13 requires Credit Acceptance to certify completion of paragraphs 11, 12, 14, 15 and 16 to the Multistate Working Group within 120 days of the Effective Date. Paragraph 17 sets a 90-day deadline, from the Effective Date, for most of these Section III steps.

Forward-looking injunctive relief (Section IV). Paragraph 18 covers newly originated accounts, those with contracts dated after December 1, 2025, that meet one of four risk-and-repossession profiles set out in subparagraphs (a) through (d): a credit score of 475 to under 500 with a PTNI of at least 13% and an involuntary repossession within 12 months; no credit score at all with a PTNI of 25% to under 28% and an involuntary repossession within 12 months; a credit score under 475 with a PTNI of at least 13% and an involuntary repossession within 18 months; or no credit score with a PTNI of 28% or higher and an involuntary repossession within 18 months. For accounts fitting one of those profiles, Credit Acceptance must waive 95% of any deficiency balance remaining after the vehicle's auction sale, may not sue to collect or sell the contract, must limit itself to no more than four total collection communications about the remaining balance once 90 days have passed after the waiver, and must consider in good faith any request to delete the associated tradeline. Under paragraph 43, this provision runs for five years from the Effective Date.

The order also imposes a series of ongoing dealer-oversight and disclosure obligations under paragraphs 19 through 26, covering vehicle price caps for subprime borrowers, ancillary product (GAP and vehicle service contract) consent and cancellation rules, and continued prohibitions on using starter-interruption devices to disable a borrower's vehicle.

What the Law Actually Says

The New York Attorney General's office alleged that Credit Acceptance's origination and servicing practices violated the federal Consumer Financial Protection Act, 12 U.S.C. §§ 5481 et seq., along with four New York statutes: Executive Law § 63(12) (the state's general fraud and illegality statute, which the order itself says "shall act as an injunction" once entered), General Business Law § 349 (New York's deceptive-practices law), Personal Property Law article 9 (which governs retail installment sales contracts, including motor vehicle financing), and the Martin Act, General Business Law §§ 352 et seq. (New York's securities-fraud statute, invoked here because Credit Acceptance's contracts served as collateral for securitized investments). None of these allegations was adjudicated; the order resolves them by agreement.

This case sits inside the broader framework of debt collection law that applies once a loan like these goes into default. Consumers dealing with a repossession or a collection account, whether or not it is connected to this settlement, should understand the general rules that govern car repossession, how debt collectors in New York are permitted to operate, and the statute of limitations on old debt, which can determine whether a stale balance is even legally collectible. Readers who are worried about a court judgment turning into a wage garnishment should also review that process separately, since this consent order does not change the general debt collection rules that apply outside its specific covered accounts. A broader overview of the topic is available on our debt collection hub.

Analysis: Why This Matters

The following is analysis from the Recording Law Editorial Team.

Subprime auto lending has drawn sustained regulatory attention because it sits at the intersection of two things regulators watch closely: a borrower population with limited access to other credit, and a lending model where the underlying collateral (the vehicle) can be repossessed and resold. A consent order of this structure, cancelling specific categories of defaulted debt while also imposing forward-looking limits on deficiency-balance collection, reflects a common regulatory pattern in this sector: address the existing harm to a defined group and separately restrict the practices that produced it going forward.

The document itself is careful, repeatedly, to separate the allegations from any adjudicated fact. That distinction matters for how the settlement should be read. The size of the numbers, roughly $700 million in combined payments and debt relief according to the New York Attorney General's office, reflects a negotiated resolution of disputed claims, not a court's determination that Credit Acceptance engaged in the conduct alleged. Both things can be true at once: a company can agree to substantial relief for business, reputational, and risk-management reasons without any court ever ruling on the underlying allegations.

The involvement of a Multistate Executive Committee and a much larger Multistate Working Group is also worth noting on its own terms. The structure lets a single negotiated document distribute both a cash payment and oversight authority across dozens of state regulators, while the underlying lawsuit was brought by only one of them. That is a common feature of large consumer-finance settlements and is not unique to this case.

How This Affects You

This relief is not something a consumer applies for. The order gives the Multistate Executive Committee sole discretion over which accountholders receive Settlement Fund money and how much, and it obligates Credit Acceptance, not the consumer, to identify covered accounts under paragraphs 11 and 12 and to send the required notice. If you had a Credit Acceptance auto loan that defaulted early and was repossessed or sold at auction between late 2015 and late 2025, the company is required by the order to determine on its own whether your account falls into a covered category and to notify you directly if so.

Because eligibility depends on specific figures in Credit Acceptance's own records, such as the borrower's credit score at origination, payment-to-income ratio, and the exact timing of repossession or auction, it is not possible to determine from this order alone whether any individual account qualifies. If you believe you have an open or recently closed Credit Acceptance account and have not heard anything, checking your credit report for how that account is currently listed, and watching for correspondence from Credit Acceptance or a settlement administrator, are reasonable general steps.

Be cautious of anyone who contacts you claiming they can get you money from this settlement faster, or for a fee. No legitimate claims process tied to an attorney general settlement ever requires a consumer to pay to receive relief they are otherwise owed, and this order does not create any consumer-facing claim form at all; distribution decisions rest entirely with the Multistate Executive Committee and the settlement administrator it selects.

This article is for general informational purposes only and does not constitute legal advice. Laws and the status of pending legal matters change frequently, and the facts of every situation differ. Consult a licensed attorney in your jurisdiction regarding your specific circumstances.

Last updated: 2026-09-21. This is a developing story; details verified as of 2026-09-21.

Frequently Asked Questions

Am I automatically covered by this settlement?

There is no automatic public list. Coverage depends on specific account details in Credit Acceptance's own records, including your credit score and payment-to-income ratio at origination and the timing of any repossession or auction sale. The order requires Credit Acceptance to identify covered accounts itself and notify affected accountholders.

Do I need to file a claim or apply for this relief?

No. The consent order does not create a consumer claim form. For the debt-cancellation provisions in paragraphs 11 and 12, Credit Acceptance is required to identify eligible accounts and send notice directly. Settlement Fund distributions are decided entirely by the Multistate Executive Committee, a group of state attorneys general, not by consumer applications.

When does the debt relief actually happen?

The order sets an Effective Date of November 2, 2026. Full debt cancellation for covered accounts under paragraphs 11 and 12 is required on or before that date, and most of the related notice and credit-reporting steps must be completed within 90 days after it.

Will this come off my credit report?

For accounts covered by paragraphs 11 and 12, the order requires Credit Acceptance to stop reporting on those accounts and to request that Equifax, Experian, and TransUnion delete the associated trade lines entirely, rather than simply updating the balance or status.

Does this mean Credit Acceptance was found to have broken the law?

No. The consent order states explicitly that it was entered without any trial, adjudication of any issue of fact or law, or finding of liability, and Credit Acceptance denies the violations the New York Attorney General alleged.

I have a current Credit Acceptance loan that isn't in default. Does this affect me?

The debt-cancellation provisions in paragraphs 11 and 12 apply only to specific categories of already-defaulted accounts from loans originated between November 2015 and November 2025. Separate forward-looking terms in paragraph 18 apply only to certain accounts originated after December 1, 2025, that later experience an involuntary repossession.

What if a repossessed vehicle still shows a deficiency balance I owe?

For newly originated accounts meeting the criteria in paragraph 18, the order requires Credit Acceptance to waive 95% of any deficiency balance and to limit further collection lawsuits and communications. That provision does not apply to every Credit Acceptance account, only to the defined categories the order sets out.

Who decides how the $60 million settlement fund is distributed?

The order gives the Multistate Executive Committee, representing California, Illinois, Maryland, New Jersey, Arkansas, Minnesota, and New York, sole discretion over which accountholders receive money from the fund and how much, through a settlement administrator the committee selects.

Is this settlement limited to New York residents?

No. The lawsuit was brought by the New York Attorney General, but the account-based eligibility criteria are not limited by state of residence, and the New York Attorney General's office has described the relief as reaching consumers nationwide.