Volvo XC 06, warranty won't cover new engine due to timing belt

My car has been leaking coolant so i went in on Monday to
get it looked at. They said I need to replace my water pump
(leaking) and my timing belt because of my current
mileage. since they were about to close and it was the day
before Xmas Eve, I went home.
I'm at 156,000 miles. The day after, i drove it to run some
errands and it sounded like it was bottoming out. Wouldn't
start so I got it towed to the shop. Turns out my water
pump failed, then my timing belt loosened and my engine
failed. The warranty company, which i haven't used yet, said
they wouldn't cover the timing belt because it's a
"maintenance issue"
I've only had the car for a year and have put 10,000 miles
on it. Bought it at 140,000. The repair shop tried to tell the
warranty person that the dealership should have replaced
the timing belt before selling it.

So, the bill for a new engine is $7,000. I will have to just sell
my car for parts at this point. Is this worth buying a used
engine and seeing if my friends dad, who is a mechanic, will
fix it for me? Anyone had experience with Elite Warranty ?
Feel like I'll just have to get a new car but wanted to see if
there was a chance for me to salvage this.