Towing Issues: Car stolen, towed and handed over title, tow fee, tow fees

Question
I had my car stolen in New Jersey. The police recovered the car damaged and undrivable. It was towed and place at the towing company. For the amount of holding car for just 3 day it was over $400 plus towing. I explained to the individuals at the towing company I could not afford to take the car out and my insurance was only liability since the car was already over 10 years old and not in the best condition. I wanted to donate the car but they said the bill had to be paid. I then decide since I can not afford to take it out then I will had it over to the towing company for salvage.
Since I had drop the insurance on the car, NYState is requesting documentation for the car. I just spoke to the towing company and they are telling me the bill still has to be paid unless the police department deems it salvage and we do not accept the title of the car.

My question is why didnt the individual who signed for the paperwork at the towing company call me and explain this to me.

What am I able to do at this point?  

Answer
Well, I am not sure what really is happening, but it sounds like your towing fees (numbers you mentioned do not seem right to me) are not correct.  But different places have different storage fees and tow fees which might be set by contracts.

Now its funny that a lot of people think that tow companies will take the vehicle and not collect anything from the owner and sell the vehicle for great amounts of money.
Remember your 10 year old vehicle might be worth 3,000 or so, but when its 10 years old and wrecked it might be worth 50.00 or 100.00 to a salvage / wrecking yard....

Most towing companies will accept titles and either partial payment of the tow fee and storage or payment of the tow fee only and they might waive the storage fee.

Now as to why the person that took the paperwork did not mention that to you, I have no idea, they might of been new, or just did not know that part of the company policy.
I know where I work, we will accept the title and at least half the towing fees which are due when the vehicle entered the yard.
Now as to NY asking for paperwork, its a tax thing most likely. I am not familiar with the registration requirements of each state. But most vehicles are taxed, and licenses are also fees that the state collects...

I would see what you can work out with the tow company about the fees and the fact (from what I see in the question) of you giving them the title.  Maybe something can be worked out.
But do not just forget about this, as some states have laws where if the police order a tow and the fees on the vehicle are not paid your drivers license will not be renewed until fees are paid.  

Hope this helps.