What You Need to Know About Vehicle Repossessions and Bankruptcy in Texas

 Posted on July 28, 2022 in Bankruptcy

For most people, owning a vehicle is necessary to ensure that they can travel to and from work and complete other daily activities. Unfortunately, this means that if a person is struggling with debts and cannot make payments on an auto loan, they may be put in an even more difficult position due to the repossession of their vehicle. Anyone who has an auto loan should be sure to understand the types of situations where repossessions may be performed. Those who are facing a repossession may be able to address these issues and avoid the loss of their vehicle by filing for bankruptcy.

Repossession Laws in Texas

In cases where debtors have secured debts, creditors have the right to take possession of the collateral used to secure these debts following a default. This means that if a debtor misses a single payment on an auto loan, the lender may take action to repossess the vehicle. A debtor will need to be sure to understand how the terms of their loan address repossessions so that they will be aware of whether missed payments may result in the loss of their vehicle.

Texas law does not require creditors to seek court approval to proceed with repossessions in most cases. A “repo man” may take possession of a vehicle while it is on a public street or parking lot or in any other situations where they can avoid a “breach of peace.” If a vehicle is located in an inaccessible area on private property, such as in a garage or behind a fence, a creditor may need to take legal action to repossess the vehicle. In these cases, a debtor may be ordered by the court to turn their vehicle over, or the local sheriff may enforce a repossession order.

After a vehicle has been repossessed, the creditor may place it up for auction to recover as much of what was owed on the loan as possible. If the vehicle sells for less than the remaining amount owed by the debtor, the creditor may pursue a deficiency judgment and attempt to collect the remaining amount owed by the debtor. However, if the vehicle sells for more than the amount owed on the loan, any surplus must be returned to the debtor.

If a debtor has defaulted on their auto loan and is facing the possible repossession of their vehicle, they can prevent the repossession by filing for bankruptcy. The automatic stay that goes into effect after a bankruptcy petition is filed will prevent a creditor from proceeding with a repossession, pursuing a deficiency judgment, or taking other actions to collect debts. During the bankruptcy process, a debtor can determine what steps may be taken to ensure that they can maintain ownership of their vehicle. In some cases, they may be able to reaffirm the loan, address past-due amounts, and continue making payments, or they may be able to redeem the loan and pay off the remaining balance.

Contact Our New Braunfels Repossession Defense Lawyer

At the Law Offices of Chance M. McGhee, we can help you understand your options for preventing the repossession of your vehicle, the foreclosure of your home, or other issues related to the debts you owe. We will advise you on the steps you can take to file for bankruptcy, receive relief from your debts, and maintain ownership of your property. Contact our San Antonio bankruptcy attorney at 210-342-3400 to set up a free consultation today.

Sources:

https://statutes.capitol.texas.gov/Docs/BC/htm/BC.9.htm

https://www.law.cornell.edu/uscode/text/11/542