The Meyrat Law Firm represents Texas consumers in auto repossession cases.
The Meyrat Law Firm sues creditors for not following specific laws when doing an auto repossession. The most common cases of wrongful repossession are:
- the consumer was not in default and the creditor ordered the repo of the vehicle anyway
- the recovery agent committed a breach of the peace when taking control of the vehicle
- the creditor did not sell the vehicle in a commercially reasonable manner.
If any of these happened to you, please call Meyrat Law Firm for a free phone consultation.
A creditor may get a recovery agent to repossess your vehicle for :
- missed car payments
- not maintaining car insurance
- breaching a condition of a contract where the vehicle
Common Legal Problems with Repossessions
- Did a default exist at the time of repossession?
- Did the Recovery Agent commit a Breach of Peace when repossessing the vehicle?
- Did the creditor accept a late payment?
- Did the creditor follow the rules to resale the vehicle?
Default and Acceptance of Late Payments
Most vehicle contracts define default as the failure to make timely payments or the failure to maintain insurance coverage for the vehicle. One day late is usually enough to trigger the lender’s right to foreclose on the car note.
When creditors accept late payments, creditors may have waived the timely payment provisions contained in the purchase contract. If late payments were customarily accepted, month after month, then the creditor must send the debtor notice that it won’t accept late payments anymore before deciding to repossess the vehicle. If they fail to give this notice, then the debtor is not in default and may have a claim for wrongful repossession.
Breach of Peace
Recovery Agents may repossess the vehicle without notice, and without a court order but not allowed to repossess the vehicle if the repossession involves a “breach of the peace.” That is, a creditor cannot legally break into your garage to get your vehicle, take it by force, take it over your objection, cause commotion in the neighborhood. What exactly constitutes a “breach of the peace” depends on the facts of each case. If there is a breach of peace serious damages could apply.
Redemption to Stop the Sale of the Car and Deficiency
Once the creditors repossess the cars, the buyer has an absolute right to redeem the repossessed vehicle at any time before the car is sold at a public sale. A creditor can be sued for stealing your property if it sells your car to the public after receiving the redemption amount.
If you can’t redeem the vehicle, and you do nothing else, such as file bankruptcy, then the vehicle will be sold at auction and the proceeds will be applied to the balance due on the loan. You still owe the deficiency – the difference between what you owed and what the vehicle was auctioned for, and the costs of repossession, storage and sale fees.
Vehicle must be sold in a “commercially reasonable” manner:
You must be given reasonable written notice of the date, time and place of the sale, which has been interpreted to mean no fewer than 10 days after the date you were given notice of the sale. After the sale, the secured creditor is supposed to send a notice of surplus or deficiency.If the creditors fail to sell the vehicle in a commercially reasonable manner or give 10 days prior notice of the sale of the vehicle, then it can result in barring the creditor from obtaining a judgment to recover the deficiency from the debtor.
Post-repossession Sale Deficiencies
A secured creditor may sue a debtor for any deficiency remaining after a post-repossession sale. If the creditor wins or if you don’t defend, typically the debt will increase by another one-third to one-half for the lender’s attorney fees and court costs. After that, the judgment bears interest until paid. Here in Texas the judgment is good for ten years, and can be renewed every ten years. The judgment remains on your credit report for as long as it is valid.
Filing a Lawsuits
There are several different causes of action that might sue under in wrongful repossession cases:
- Intentional Torts
- Illegally taking your property
- Breach of contract
- Deceptive Trade Practices
- Violations of the Uniform Commercial Code
- Fair Debt Collection Practices Act
Damages – You might recover
- Economic damages in a DTPA claim
- Actual damages in non-DTPA claims
- Punitive damages for the wrongful conduct of the creditors
- You might get your car back
- Cancel the deficiency owed on the car.