Loaned Motorcycle in Police Custody, May Dealer Demand Payment?

X entered into a motorcycle loan with Dealer Y. However during the loan period, X got involved in a road accident wherein his back rider Z died. According to X, it was a hit-and-run with another vehicle. The motorcycle is still in police custody since the family of Z took back their Affidavit of Desistance. No case has yet been filed. Dealer Y is threatening X that if the latter does not continue paying the debt, Dealer Y will be the one to pursue the Affidavit of Desistance from Z's family in order to have the motorcycle released. What rights does X and Dealer Y have with regards to the payment?