Most debtors never imagine that they will be facing vehicle repossession when they buy their car; but repossession is very common and becoming more of the norm as the economy worsens. Unfortunately for debtors facing repossession, a process that should be simple often becomes complex or even dangerous. At least a few times a year, news reports reveal several stories about rogue repo men who take the repossession process a little too far. One woman was recently in a car crash after being chased and rammed by a repo man.
Texas Repossession Laws
Here are seven facts you need to know about the Texas repossession laws:
1. Anyone Can Grow Up to Be a Repo Man
Repo men in Texas do not need a license to operate. Unfortunately for debtors facing car repossession this can mean dealing with a Texas repo man could prove more risky. Keep this in mind when you think about “reasoning” or “arguing” with a repo man. If a repo man has come to repossess you vehicle, it is best not to argue or resist. You may be able to get your vehicle back later if you can work out a deal with the finance company.
2. Know the Terms of Your Loan Agreement
The first step to avoiding repossession is to know and understand your rights. If you have financed or leased your vehicle, the terms and conditions stated in your agreement will spell out under which circumstances your vehicle can be repossessed. Take the time to read your contract.
3. Repossession Can Happen as Soon as You Miss One Payment
Under Texas law, your vehicle may be repossessed even if it is “only” late. That means that if you payment was due on November 1st and you haven’t paid by November 10th it is possible to find your vehicle was repossessed by the 11th of November.
Some Lenders Are More Aggressive Than Others
Some lenders are more aggressive about repossessing cars than others. For those with poor credit, “Buy Here Pay Here” lots offer financing for just about anyone. On the other hand, they’re notorious for being a revolving door for selling the same cars over and over again. You need to know exactly what the terms of your loan are in order to avoid repossession.
In some cases, lenders will “accelerate” your payments after you miss one. In other words, because you missed one payment, they will demand that the entire amount be paid immediately or you risk repossession.
It also helps if you know you’re going to be late with a payment. While some creditors may not be forgiving and are within their rights to repossess a car according to the terms of your loan, if you’re upfront about missing a payment, they may be inclined to let you slide for one month as you get your finances in order.
What Happens After Repossession?
Note that just because they repossessed the vehicle doesn’t mean that they can’t come after you for the remaining amount on the loan. They can. Once your car is repossessed, it will be sold at an auction. That money will cover the cost of the repossession and sale of the vehicle. Whatever is left over will be used to pay off the remainder of your loan. If that money doesn’t cover the full loan amount, then the creditor can sue you for the remainder. You can, however, discharge this in Chapter 7 because the loan is now considered an unsecured loan as opposed to being secured by the vehicle itself.
But Texas repossession laws do not require lenders provide you with a grace period. The repossession will also stay on your credit report for the next seven years.
4. The Lender Does Not Require a Court Order to Repossess Your Vehicle
The Financer or Leaser does not need to go to court in order to repossess you vehicle, nor are they required to give you advance warning.
5. The Repo Man Can Repossess the Vehicle on Your Property
The repo man is allowed to come onto your property to repossess you vehicle; but they are not allowed to disturb the peace to do so. Also, if your repo man needs to come onto your property to repossess your property, they are not allowed to destroy or damage you property to carry out the repossession.
This, of course, leaves many wondering if they can keep the car in their garage or otherwise hide it from the repo man. While there is nothing physically stopping you from doing that, this violates the contract that you signed with the lender. In other words, you are immediately in the wrong so far as the law is concerned. In fact, it’s a crime to hide or conceal a property on which there is a lien. If the lender’s repo man suspects that you are attempting to break the terms of the contract by hiding the property, they can report this to the authorities who can then charge you with a crime. In other words, you’ll end up owing both the lender money and the State of Texas who will fine you for your actions.
6. Repo Men Can’t Attack or Threaten You
The repo man is not allowed to physically harm you, threaten you or in any way demean you while carrying out the car repossession. Doing so would be a disturbance of the peace.
On the other hand, you may not attack or threaten the repo man either. Repo men often have concealed weapons permits. In at least one case, a man became combative with the repo man who was attempting to repossess his truck. He attempted to hit the repo man with a stick and rammed his repo truck with the vehicle that the repo man was attempting to repo. The repo man pulled out his weapon and shot the man. The man was escorted to the hospital. No charges were filed against the repo man.
7. Bankruptcy Can Stop a Repossession
Filing bankruptcy can stop repossession. Once you file bankruptcy your finance company is not allowed to carry out a car repossession. Bankruptcy will give you the leverage necessary to keep your vehicle and other assets.
On the other hand, a creditor is allowed to file a petition with the court to lift the “automatic stay”. This petition, however, is seldom granted so long as the bankruptcy is being filed legitimately and not for the sole purpose of delaying the repossession.
By filing for bankruptcy, any and all creditor actions against you must stop while your bankruptcy is being processed. Whether or not you can keep the car indefinitely will depend on whether or not you can continue to make payments on it. In some cases, those filing under Chapter 13 can qualify for what is known as a “cramdown”. A cramdown allows you to discharge interest on the loan and revalue the cost of the vehicle. If you qualify, you may be able to pay off the current value of the vehicle and keep your car.
We Help Stop Vehicle Repossessions in Texas
If you are facing repossession in Texas and want to save your vehicle, feel free to contact us today for a free consultation.