The Texas Repo Law Guide: What You Can & Can’t Do

Repossession is the legal process where a lender takes back a vehicle after the borrower misses required payments or defaults on the loan agreement. Texas repo laws allow lenders to repossess a car without going to court and sell the vehicle to recover some of the costs of the loan. However, there are limits on what they are allowed to do.  

In this guide, we’ll cover Texas repossession laws for cars, including what a repo agent can do as well as your rights and responsibilities. 

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How Many Payments Can You Miss Without Risking Repossession in Texas?

Under Texas repo laws, you don’t have the luxury of missing a set number of payments before your car can be repossessed. Once you default under your loan contract, the lender has the legal right to repossess the car. Default can start as early as the first day the payment is late, depending on your contract. Most lenders don’t act this quickly, often waiting until the payment is 30 to 90 days late, but it’s better not to assume you are safe missing a payment. 

Check the contract to understand what counts as default. Knowing your rights can help you plan better. Even if there’s a grace period for late fees, most loan agreements consider you in default after one missed payment. In addition to missing payments on your loan, you can be in default of the loan contract if you miss car insurance payments. Most lenders require full coverage insurance on the car until the loan is paid off. 

Will You Get Notified Before the Repossession?

Many lenders will send a notice, either by mail or phone, before repossessing your vehicle, but Texas auto repo laws do not require your lender to notify you. If you’re in default on your loan, you may find your car repossessed without notice. 

How to Prevent a Repossession

If you’re behind on car payments or think you might be soon, it’s important to take quick action to avoid repossession. Communicate with your lender as early as possible before the due date. Don’t wait until you’ve missed multiple payments. Many lenders are willing to offer extensions, payment plans, or temporary deferments, depending on the circumstances. 

If the lender accelerates the loan, that means they’re asking for the full balance of the loan. You cannot stop repossession by making late payments at this point. Instead, you’ll need to pay off the loan to stop the repo agent from taking your car. 

What Repossession Companies Can Do in Texas

Under Texas repo laws, lenders are able to take your car without a court order, as long as they aren’t breaching the peace. And while they don’t need a license to operate as a repossession company, they do need a license to use a tow truck.

Repo companies can repossess your car from pretty much any location–as long as it’s not held within a closed garage or behind a locked gate. That means if the car is parked in a public parking place, in front of your house, or in your open garage. 

What They Can’t Do

Texas repossession laws for cars prevent the repo agent from breaching the peace when repossessing a car. They cannot: 

• Break into a closed garage
• Force open a locked gate
• Threaten you or your property
• Use physical force
• Repossess a car from tribal land unless the tribal laws allow it

Additionally, if you object peacefully to the repossession, they must stop. If they continue after your objections, the repossession company will be in breach of peace. Most agents act when they know you won’t likely be around. 

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What You Can Do During a Car Repo

If your car is being repossessed, you can peacefully object to stop the repossession. The repo company has to stop. If you object and they don’t listen, it’s a good idea to hire a lawyer. 

Make sure your objection is peaceful. Do not threaten or hurt the repo agent, and do not damage the property. You’re at risk of criminal charges if your confrontation gets physical. 

What about Things in Your Car?

If your vehicle is repossessed when you’re not around, you’re probably wondering how to get your things back from the car. Some loan contracts allow the repo agent to take your physical belongings and dispose of them. However, they have to send you a written notice within 15 days of noticing the possessions in the car. The notice will tell you how you can get your things back, inform you of the 30 days you have to claim your items, and tell you that they will be thrown out if you don’t claim them. 

If you’re at the repossession, it’s a good idea to grab anything that you can. If you’re not there, call the repo company or your lender as soon as possible to get your things back. It’s also important to know that the repo company cannot force you to make any payments before returning your belongings. 

What You Can Do After Your Car Has Been Repossessed

If your car has been repossessed, Texas auto repo laws provide you the right of redemption, as long as the lender hasn’t sold the car. In some cases, you may be able to file bankruptcy to get your vehicle back, as long as you can make the payments. However, you will likely have to pay the full loan balance plus the cost of repossession. Your lender will send you a notice after the repossession with relevant details for getting the car back. 

What You Can’t Do

If you know your car is going to be repossessed, you cannot hide it. Most loan agreements require you to make the car available on demand when requested by your lender. Hiding the car or damaging it in any way puts you at risk of criminal charges. 

What Happens After It’s Been Repossessed

Once the vehicle has been repossessed, the lender will send you a notice if they are planning to sell the vehicle. The notice must be given a reasonable amount of time before the sale–at minimum, ten days prior. 

Once the vehicle is sold, the money goes to cover the costs of the repossession and sale. If there is any money leftover, it will cover as much of the remaining loan balance as possible. There may be a balance afterwards, as most repossessed cars sell for less than market value. You will be responsible for the leftover balance. 

How Long the Repossession Stays on Your Credit Report

After a repossession, Texas repo laws keep the repo on your credit report for seven years. This can significantly impact your credit. It’s always best to avoid a repossession if you can. 

Texas Repo Laws Conclusion

Texas repo laws allow lenders to repossess your vehicle after a single missed payment. The best way to avoid repossession is to make your payments on time and communicate with your lender if you know you’re going to be late. 

If you have any questions about Texas auto repo laws or you’re in the market for a new or used car, contact Tipton Hyundai today! We have a huge inventory of new and used vehicles. We serve customers all over the state, including McAllen, Mission, Harlingen, and even ship to San Antonio and Corpus Christi. We can also help you with all your auto repair and car service needs including oil changes, ac repair, new tires, and radiator repair. 

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