Santander Triad Vehicle was a total loss, remaining balance should have been charged off but turned into debt collector Fort Worth, Texas

I was involved in an auto accident, in which I was not at fault. 
- While it really doesn't matter now but if the accident was not your fault why didn't you go after the other driver/insurance company to pay for the total cost of the vehicle?

Santander told me the balance would be charged off.
- When a company "Charges Off" an account that means they give up on trying to collect from you.  As a result of this they will sell the debt to another company, such as as Collection Agency.  It DOES NOT make the debt go away, it just means you owe the debt to another company.

Should I seek legal counsel?
- Your not going to like this entire answer. 

First a 3rd Party Debt Collection Agency is bound by the Fair Debt Collection Practices Act(FDCPA).  As such if you inform them they are not to contact you they can not contact you.  If they do contact you after receiving the Certified Letter you can sue them for violations of the Fair Debt Collection Practices Act.  Hopefully you have a return receipt showing when they received it to make this proof easier.  You can sue them for actual damages plus up to $1000 in Statutory Damages.  This can be done in Small Claims Court on your own. 

However, remember that your original loan agreement does not have exceptions if you no longer have the car.  So in the end it really doesn't matter if you can afford the remaining balance or not.  They have the legal right to file a suit against you for the balance plus their court and lawyer fees.  So if you file suit against them for FDCPA violations they may match that with a suit against you for this balance, and I think you can see where that would probably go.  But for $8,000 it may to be to your advantage to at least consult with a lawyer.

Not much to add to the reply, as it was spot on. Note that a "charge off" is simply an internal accounting thing for the company to square their profit/loss statement (I believe they are required to charge it off, as otherwise they are being misleading in calling the loan an asset). 

The fact that the collection agency paid "pennies on the dollar" for the debt is not really relevant, since the chances of them collecting from these types of debts are pretty low. However, you may be able to negotiate a lower balance and/or a payment plan with them. BTW, note that the charge off is one of the worst things you can have on your credit report, unfortunately. 

I have a question, though: what kind of interest were you paying on this loan? To be *that* upside down after a couple years is somewhat bizarre. Also, was it a new car?

First, Santander was probably just the loan servicer for Triad, of its Triad that actually sold the loan to the collection agency.

As the others stated, the charge off didn't let you off the hook. It was just putting the inevitable off, until now.

You may still have recourse to sue the other driver, or his insurer, or both, to collect on the gap difference, but its YOU who owes the money to the loan owner, not them. Check with your civil courts on statutory limitations, as well as if the amount you need requires civil as opposed to small claims to pursue.

Lesson to be learned is always get Gap insurance when taking a car loan, if you can't afford the potential hit.

If you get nowhere going after the other party on your own, you're advised to get a lawyer.