A settlement reached September 17, 2026 splits $700 million in a way that matters to anyone who ever financed a used car through a subprime dealer: more than $630 million in debt relief, $60 million in restitution, and more than $15 million in penalties that go to the states rather than to borrowers. Credit Acceptance Corporation (CAC) agreed to the terms with New York Attorney General Letitia James and a coalition that includes 39 other states and the District of Columbia, according to the New York attorney general’s announcement.
Where the $700 million goes, line by line
The office’s accounting has three pieces. The debt relief, which the announcement puts at more than $630 million, reaches more than 55,000 consumers nationwide, about 2,500 of them in New York. The restitution, $60 million, is paid to consumers who lost their cars to repossession. The penalties, more than $15 million, are paid to the attorneys general. That last line is the one that does not reach a borrower’s budget; it is the price the states attached to the conduct they alleged.
The coalition counts 41 jurisdictions when New York is added to the 39 other states and the District of Columbia. The announcement also names Hawaii’s Office of Consumer Protection as a participant, since that state’s consumer cases run through that office instead of the attorney general.
What a borrower with a CAC account has to do
The announcement states plainly that no action is required from consumers: the debt elimination and relief are automatic. For households that dealt with CAC, the practical questions are therefore about paperwork and surprises rather than about filing: whether a collection letter or a bank-account debit still arrives after the settlement, whether a repossession shows up on a credit report, and whether a payment that should have been returned has not been.
A household that still gets a collection notice after the settlement needs a record of what it was sent and what it paid. The Bank Account & Debt Protection Kit contains the debt-validation steps and a protected-funds and dispute log for exactly that sort of paper trail.
See the debt-validation steps for a CAC collection notice →
What the states said CAC did
The allegations are the reason for the size of the deal. The announcement says CAC pushed consumers into loans they could not afford, at interest rates averaging 38 percent a year and in some cases above 100 percent. It says loan costs were concealed, leading to high delinquency rates and repossessions affecting nearly half of borrowers. The states also alleged that CAC manipulated its dealer relationships so profits were protected whatever happened to the borrower, pressured consumers into expensive add-on products and insurance, and misrepresented the legal compliance of loans when packaging them as securities for investors.
Attorney General James said in the announcement that 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.” The New York case was filed in January 2023. The announcement notes the federal Consumer Financial Protection Bureau withdrew from it in early 2025, and New York continued the litigation alone.
Settlements describe allegations, not findings of liability for every claim, and this one is no different. The money and the changes in business practice are what the agreement commits CAC to.
The 95 percent rule applies to a narrow group
One term deserves careful reading because it is easy to overstate. For certain at-risk borrowers who default within 12 or 18 months and whose vehicle is repossessed and sold, the announcement says CAC “must forgive 95 percent of their debt and will only be allowed to collect the remaining five percent.” That is a rule for a defined set of borrowers, not a blanket write-off of every CAC balance. The broader relief, the more than $630 million, is the part that reaches the 55,000-plus consumers.
The settlement also bars CAC from pursuing debt collection or reselling debt in the cases covered, requires outreach to consumers outside the dealership to disclose add-on products they bought, and gives them options to cancel those products while keeping the vehicle.
Keeping a paper trail while the relief is processed
The free route starts with the office that announced the deal. The New York attorney general’s office lists a consumer line at 1-800-771-7755 (1-800-788-9898 for deaf or hard of hearing callers) on its settlement announcement. Borrowers in other states can start with their own attorney general, since 39 of them are part of the coalition.
Gather the loan contract, the most recent statement, any repossession or sale notice, and every letter received from CAC or a collector since September 17. Compare the balance on the most recent statement with what a collector is asking for; if the amounts differ, write down the date and the person who gave the figure. Watch for a bank-account debit that continues after the settlement and note it in writing.
For a household that wants those records in one sheet, The Bank Account & Debt Protection Kit is a 10-page kit that adds the frozen-account response and the 2-month bank protection rule to the debt-validation steps and the protected-funds and dispute log.
Click here to get The Bank Account & Debt Protection Kit →
This piece was drafted with AI assistance; the figures and dates were checked against the New York Attorney General’s September 17, 2026 announcement linked above.
