Everything You Need To Know About Repossession Laws in Texas
Are you worried that you might lose your vehicle or some other personal property to repossession?
You should talk to a lawyer immediately. According to Texas repossession laws, if you fall behind on your payments, the lender can take possession of your property, auction it off, require you to pay any balance that remains on the loan after the sale, and keep the money you've already paid.
Fortunately, you can avoid losing your property and stop repossession by filing for bankruptcy. It’s essential to act quickly when facing the possible loss of your property, so you should talk to a repossession lawyer as soon as possible. Your lawyer can help you file for bankruptcy and stop your lenders from repossessing your belongings.
When Are You Threatened by Repossession in Texas?
Under Texas laws, your possessions can be repossessed if you have defaulted on a loan that is secured by that property. This means that you pledged the thing you were buying as collateral to secure the loan, and if you fail to make the required payments, the lender has the right to repossess it to recover the debt.
Notably, the laws allow lenders to repossess as soon as you are in default. Typically, this means the moment your first payment becomes late. Although your contract may include a grace period, these usually only apply to late fees and not when your vehicle can be repossessed. In most cases, your vehicle can legally be repossessed the day after you miss a payment.
That’s why it’s crucial to discuss your situation with a knowledgeable lawyer as soon as you become aware that you are likely to fall behind on your car payments.
What Does the Procedure Involve?
If a lender wants to repossess your car, they may provide you notice of their intent to do so. However, the laws do not require them to do so, and often you will find out that your car or truck is being repossessed when the repo agents show up to tow it away.
Once the vehicle has been physically repossessed, the lender will sell it through a private sale or auction. The sale price will then be applied to the repossession costs and the remaining balance on your loan. If the sale does not cover the entire balance (it often doesn’t), you will owe the remainder, which is known as a “deficiency balance.”
What Are Your Rights?
Although they are limited, Texas laws grant you certain rights during the repossession process. For instance, repo agents cannot breach the peace, break into your garage, cause damages, or threaten you while taking your property.
Likewise, the lender is legally required to send you a notice that includes important information before your car is sold. You also have the right to “redeem” your vehicle after it has been repossessed by paying the total remaining balance along with any repossession costs. However, you must exercise this right before the vehicle is sold.
A local lawyer can tell you more about your rights and remedies during the process.
What Are Your Options if Your Property is Repossessed?
After a repossession, the relevant laws provide a few methods available to recover what was taken. Nevertheless, many people find that seeking the help of a qualified bankruptcy lawyer is the only truly viable option.
Filing for Bankruptcy
If you act quickly, filing for bankruptcy with the help of an experienced lawyer can help you avoid losing your property to repossession. However, it’s best to file before the repossession occurs, and absolutely necessary to file before the vehicle is sold at auction.
While your bankruptcy lawyer can usually help you get your repossessed car back by filing for Chapter 13 (as long as it hasn’t been sold), if you file early enough, bankruptcy can prevent it from ever being taken. When you file a bankruptcy case, the laws require the court to issue an automatic stay that orders your creditors to immediately cease collection activities. This includes repossessing your property.
Bankruptcy laws will also ensure that you can keep your vehicle after your case is closed and the automatic stay is lifted. Whether you file Chapter 7 or Chapter 13, your lawyer will almost always be able to work out a plan that allows you to keep your car or truck, as long as it hasn’t already been repossessed. However, only Chapter 13 will allow you to get your vehicle back after it has been repossessed, so it’s even more important to act quickly if you want to file Chapter 7.
Reinstating the Loan
The laws in some states create a right to reinstate a loan after repossession by making a lump sum payment to cover the past-due balance and any additional fees owed. However, Texas law does not require lenders to give you this option. This means that your lender does not have to allow you to reinstate unless it is required by your contract.
Refinancing the Loan
Another potential option is to refinance your loan, either with the original lender or a different one. However, this process is often challenging, particularly when your credit has been damaged by late payments and repossession. You may also struggle to keep up with your new payments if your financial situation hasn’t changed since you fell behind in the first place.
Schedule a free debt analysis with a skilled DebtStoppers lawyer today and receive professional guidance on the best way to fix your financial troubles and avoid repossessions.