What Happens if My Car is Repossessed?

In Texas, secured creditors are allowed to repossess their collateral (your vehicle) without a court order as long as they do not breach the peace.

Secured creditors (your finance company or bank) are not required to give advance notice of intent to repossess.

There is no set waiting period before a secured creditor can repossess their collateral; if you are one day late on a payment or have violated some other term of the contract, your vehicle may be repossessed.

After repossessing a vehicle, a secured creditor must notify you the car has been repossessed and allow you to retrieve any personal possessions left in your vehicle. You should not be charged for retrieving your property. Nor should you be required to sign a release.

A secured creditor must send a letter telling you that they have repossessed your vehicle; that the car will be sold at either a public or private sale; that the sale will be conducted on or after a certain date and you must be given an opportunity to redeem the vehicle prior to that date.

If the vehicle is sold, the sale price must be applied to the balance of the loan. You may be liable for any deficiency.

The secured creditor may accelerate (call the whole debt due) and require the entire balance of the loan be paid, including a repossession fee, before releasing the vehicle.

If the secured creditor does not send the letter telling of their disposition of the vehicle, they will be barred by Texas law from collecting any deficiency that may be due.

In addition, you may have a claim for statutory damages from the secured creditor.

If the secured creditor wants to keep your vehicle in satisfaction of the debt, they must send you, in writing, their proposal to do so. They must have your consent. You may object or deny their request, preferably in writing. If you refuse, then the secured creditor must send you the notice referred to above, about disposing of the vehicle.

Two tips: make sure the secured creditor has your current address. With regard to the notices described above, they are required only to send them and are not required to make sure you receive them. Second, make sure you keep a complete copy of all your paperwork in some place other than your vehicle; if your car is repossessed, you may not be able to retrieve your papers. You should also know that any agreements for extension of time to make payments which are not in writing will not be enforceable. If you make an agreement for late payments, be sure to send something in writing confirming your agreement.

If you think a secured creditor has not followed the law by repossessing your vehicle or in their disposition of the vehicle after disposition, please call me to discuss your legal options.