Answered on Aug 18th, 2011 at 6:58 PM
I am assuming that your wife was negligent in the accident and State Farm covered their insured's damages and sought to recoup what they paid from your wife. State Farm should give you an accounting of what has been paid and what is still owed and whether they are charging interest. If they refuse to do so you should report them to the state insurance commission and refuse to make any more payments. Additionally, if the accident happened "several years ago" it is likely beyond the statute of limitations and State Farm may be unable to sue your wife at this point to collect the rest of what is allegedly owed. Your wife should consult with a lawyer to determine whether it is in her best interest to continue making payments on this debt that State Farm unilaterally imposed on your wife. In my experience, insurance companies threaten to sue you when you don't have insurance and are responsible for the accident, but seldom follow through if you call their bluff. On small accidents it is not worth their time to sue, especially if the defendant does not have significant assets to pay a judgment.