Facing repossession?

Repossession is the legal process a lender uses to take back property (often a vehicle) from a borrower who has failed to meet the terms of their loan agreement, typically due to missed payments.

The two main types of repossession are voluntary repossession and involuntary repossession.

Voluntary repossession means the borrower willingly returns the property to the lender, often after realizing they can't afford the payments.

Involuntary repossession means the lender takes back the property without the borrower’s consent typically using a repossession company.

Missing a payment can lead to defaulting on your loan. After a certain number of missed payments (usually detailed in your loan agreement), the lender can begin the repossession process.

The process typically begins when a borrower misses one or more payments.

In Texas, creditors must provide notice about the repossession and intentions regarding the sale or disposal of the repossessed property. However, specific requirements around the timing and content of these notices can vary.

The creditor then physically takes possession of the property and sells it at auction to recover the owed amount. Before the vehicle is sold, you have a right to reclaim the property by paying off the full loan balance plus any associated costs.

Texas allows for “self-help repossession”, meaning a creditor or repossession agent can repossess a vehicle without going to court, as long as it can be done without breaching the peace.

Possibly. Once a car is repossessed, the lender will likely sell it at auction. If the money from selling the car doesn’t cover the full amount owed, you may still be responsible for paying the balance, known as a deficiency balance.

• You have the right to receive notice before the repossession or before the sale of the property.
• You have the right to redeem your property by paying the amount owed, including any repossession and storage fees before the property is sold at auction.
• Lenders cannot breach the peace when repossessing property and certain aggressive repossession practices are prohibited in Texas, which includes misrepresenting themselves as law enforcement officers or using force to take possession of property.
• The lender must sell the property in a reasonable manner, which generally means selling it for fair market value.
• If the sale of the repossessed property results in surplus funds (more than the amount owed), the borrower is typically entitled to that surplus.
• If the sale of the repossessed property doesn’t cover the loan balance, lenders may seek a deficiency judgment against the borrower, however, they must provide notice and adhere to certain procedures to lawfully pursue this judgment.

Yes, once you file for bankruptcy, an automatic is triggered, which halts the repossession and gives you time to reorganize your debts.

Repossession is reported to credit bureaus and can significantly damage your credit score. The repossession and any deficiency judgments may also appear on your credit report for several years.

In some cases, yes. Options include paying the overdue amount to bring the loan current, negotiating a new payment plan, or filing for bankruptcy, which may temporarily halt repossession efforts.

In Texas, you have the right to get your repossessed property back by paying the full amount owed, including any repossession and storage fees, before the property is sold at auction.

Texas has consumer protection laws that provide remedies to people who have been subjected to illegal repossession practices, including potential claims for damages.

If you believe your property was repossessed in error or without following proper legal procedures, you should contact an attorney. You may have the right to reclaim your property or receive compensation.