Your Rights After A Texas Car Repossession
How does one get one's car back? What will I owe if I let the car go after repossession? What conduct is illegal during the actual repossession? Will a repo harm my credit?
Getting Your Car Back After A Repo In TexasUnlike some other states, Texas does not permit "reinstatement," meaning the consumer cannot pay the past due amount to get the vehicle reinstated. The only way to get your car back in Texas is to "redeem," or pay off the full loan balance, plus the repossession fee. The bank or finance company will send you a written notice after the repo, telling you the amount you need to pay. You only have ten days to pay the redemption amount, or your car will be sold at auction.
How Much Will I Owe If I Can't Redeem The Loan?If you cannot redeem, your bank or finance company will sell your car at auction. You will receive a credit for the amount of the auction proceeds, which will be applied to your loan balance. The amount you owe after the credit is called the deficiency balance. The bank can demand this amount from you, and has the right to sue you for the deficiency.
How Do I Escape A Deficiency balance?There are three ways.
First, have a qualified consumer attorney analyze the "Notice of Intent To Sell Motor Vehicle" which the bank will send you after the repossession. If there are any defects in that written notice, the bank loses the right to collect any deficiency balance from you, and might even have to pay you penalties.
Second, if there was a breach of the peace during the repossession (see next section), you may be able to offset your deficiency balance with the penalties you recover by suing the bank and repossession agent for the wrongful repossession.
Third, you can file bankruptcy to escape a deficiency balance, but that is not an attractive option unless you have a lot of other debt besides the deficiency. The lender may never pursue the deficiency balance. Furthermore, bankruptcy will ruin your credit rating for years, so look into options 1 and 2 before thinking about bankruptcy.
What Is A Breach of the Peace And Why Does It Matter?A breach of the peace happens when the repossession agent (towing company) takes the car by illegal means or creates a disturbance during the repossession. Some examples include: (1) going into a secured area (either gated, fenced, or guarded) without permission; (2) going into an underground parking garage by somehow opening the gate, or following a car in; (3) breaking or opening any lock, or gate; (4) taking the car after someone objects; (5) damaging the car during the repossession; (6) blocking the car with the tow truck, or chasing people on the highway; (6) any violence or touching of the car owner; (7) a public disturbance like yelling, honking horns, or talking to neighbors; (8) moving other cars that blocked the repossessed vehicle; and (9) threatening anyone with arrest or bodily harm, or criminal charges.
A breach of the peace matters alot -- because there are big penalties in Texas for committing one. You will be able to sue the lender and the repossession agent for these penalties, and thereby offset your deficiency balance, or even eliminate it. You will need to speak with an experienced consumer repossession lawyer to analyze your case in detail. The lender has to pay your attorneys fees, so you may not have to pay attorneys fees.
How Does A Repo Harm My Credit?A repossession can significantly affect your credit, especially your ability to get a new car. The "repossession" notation appears on your credit reports, in addition to your delinquent payment history, creating a red flag to any dealership when you go to finance another car. The "repo" notation might be able to be deleted however, if there was a breach of the peace during the repossession of your vehicle.