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They will certainly be entitled to the $10,000 in cash. The chances are that the car is not now worth anything like she paid for it. Look up the book value on one of those sites. Present the car for valuation, without taking trouble to clean it up. See if you can get a low book value, then offer to buy if from the NH. If they have to seize it and sell it, the hassle and the costs of commission for them may mean that they are open to any reasonable offer.
Now the car, that is part of her estate. As such it can be sold to offset the cost of her care. You can buy it at Market Value. Not sure if that is the retail value or private sale amount. The NH won't "seize" anything. They aren't in the business to do this since it costs them money. They may sue.
Does Mom own a house? If so, not sure what you would do here. Get a loan against the house to pay the bill?
You may need to run this passed a lawyer. How far did you get with the Medicaid application, maybe if dated before her death, they may pay the 9k you can't pay. You need to ask Medicaid about this.
As to those thinking for their own future, cars can have title (at least in California) put in name of two, if husband and wife or other immediate family, so while I no longer drive my domestic partner's car is registered in his OR my name. Mom could have put it in both your names, and in my State can be done in Triple AAA office if you are a member.