If this was thru a third party, the borrower would still be responsible for the loan payments prior to the GAP insurance settlement being received according to your loan contract and I think you could continue interest accrual, etc., until the GAP insurance check arrived. If your CU sold them the insurance, I would say not considering the loan paid while you are waiting for the GAP to settle might be in UDAP territory. I think there is a big difference.
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