Texas Car Repossession Rights
- Many people do not understand that a creditor may also repossess an automobile for any default listed in the agreement, such as failure to maintain full insurance coverage on the vehicle. Nonetheless, the creditor cannot tow your car with a child inside or a person sitting on the vehicle. Breaking through a fence, a garage door or banging on the door late at night violates the law. The creditor has an obligation to inform you of the repossession.
- A consumer has ten days in which to redeem his automobile by paying the debt in full and its associated costs. Alternatively, the individual may insist the creditor sell the automobile and apply the proceeds to the outstanding loan. In addition, the creditor must return any money receive beyond the debt to the consumer. If the creditor intends to sell the automobile at a public auction, the seller must inform the consumer of the sale date in advance.
If the sale occurs to a private individual, the creditor has the right to inform the consumer after the transaction has taken place. The creditor does not have a right to keep personal property found in the automobile. A consumer who hides, conceals or does anything to prevent a creditor from enforcing the right to repossess the automobile violates the law. - Consumers who have trouble making their automobile payments on time should contact their creditors the moment they realize the payment will be late. Most creditors appreciate the consumer calling, and they may have more of an incentive to work with you. Some may even change the scheduled payment date. Obtain any revisions in writing in case of an issue later down the line. The creditor has no obligation to negotiate, accept late payments or make other modifications to the original agreement.
- If a balance remains after the application of the proceeds to the balance of the loan, the lender may sue the consumer for the difference. For example, if the consumer owned $4,500 on the automobile--yet the creditor receives $3,000 from the sale--the consumer owes a deficiency of $1,500. In addition, the creditor may add other costs, such as fees and repossession expenses.
- The Texas Attorney General recommends that car buyers keep all receipts and documents pertaining to the purchase and payment of their vehicle in a safe location. Do not keep the records in the glove compartment or any other place in the vehicle. This will ensure that you have the necessary proof in the event an unscrupulous dealer illegally repossessing the vehicle. Obtain receipts for payments; pay with a check, money order or cashier's check whenever possible.
