Since your brother's car was stolen and declared a total loss by his insurance company then his claim through his comprehensive coverage should settle with him for the actual cash value (ACV) of the vehicle at the time it was stolen. When this settlement amount is determined most insurance companies will make the check out to both the policyholder and the lien holder (who is usually listed on the policy as a loss payee).

If the check is made out in this manner then the lien holder would have to sign on the check for it to be cashed and it is doubtful that any loan company would allow your brother to keep the money instead of paying off the loan since the lien holder no longer has their asset, the vehicle.

It would appear that you were a co-signer on the loan and thus are invested in what happens to the insurance check and the car loan payment. If that is the case you should see if you can find out how the check is going to be issued. If it is going to be in both names (the brother and the lien holder) then you may want to discuss the issue with the lien holder to make certain that they will retain the check for the balance due on the car.

If the car loan balance is more than the ACV settlement amount then your brother will still need to continue to pay on the loan unless he has GAP insurance to make up the difference. If the loan balance is less than the ACV then any monies above what is due on the car should come back to your brother.

If the insurance company's settlement is made out to only your brother, which is unlikely, and he chooses not give the money to the lien holder then this might be a breach of contract depending upon what the loan papers state about this type of situation. As for repercussions for doing this, you would need to check with the financial institute which the loan is through to find out what they could be.