Texas Repossession Laws: What Happens When You Miss Car Payments

Your auto lender can take your car back if you break your loan contract. Missing payments is the most common way this happens. Repossession is your lender’s legal right when you default. Texas repossession laws protect both you and your lender. Understanding these laws helps you know what to expect and how to respond.

How Many Missed Payments Trigger Repossession in Texas?

You risk repossession after missing just one car payment in Texas. Most loan agreements consider you in default when a payment is even one day late. Once you’re in default, your lender has the legal right to repossess your vehicle. Most lenders won’t repo after a single missed payment. But they can.

Some contracts include a grace period for late fees. That doesn’t stop a repossession though. A grace period for fees differs from a grace period before default. Read your loan agreement carefully to understand your specific terms.

Missing insurance payments can also trigger default. Most loan contracts require full coverage on your vehicle. If your insurance lapses, your lender may repossess the car. Your payment history won’t matter if you break the insurance requirement.

Will You Get Notice Before Repossession?

Your lender might warn you before repossession. But Texas law doesn’t require advance notice. Your lender can repossess your car without any warning if you’re in default.

How to Prevent Repossession

Missing a payment doesn’t guarantee immediate repossession. But the risk is real. Paying before your lender takes action is your best protection. Act quickly if you’re behind on payments.

Contact your lender as soon as possible. Explain why your payment is late and when you can catch up. Many lenders will work with you, especially for first-time late payments. You might pay a late fee, but you keep your car.

If your lender accelerates your loan, they’re demanding the full balance immediately. A single payment won’t stop repossession at that point. Many contracts waive your right to notice before acceleration. You may not see it coming.

Reach out before your payment is due if you know you can’t pay. Some lenders offer short extensions or payment deferrals. Proactive communication can save your vehicle.

What Repo Companies Can Do in Texas

Lenders can engage in self-help repossession. No court order is required to take your car. Texas doesn’t require special licenses for repossession companies. But repo agents using tow trucks need tow truck operating licenses from the Texas Department of Licensing and Registration.

A repossession company can get your car from any unprotected location. Public or private property doesn’t matter. Your car can be repossessed from streets, parking lots, or driveways. Repo agents can even enter an open garage to take your vehicle.

Breach of Peace Protections

Self-help repossession must not breach the peace. Texas law doesn’t define breach of peace precisely. But certain actions clearly cross the line:

• Opening a closed garage door to access your vehicle
• Breaking into a locked gate or fence
• Threatening or using physical force against anyone
• Threatening to damage or damaging property

Repo agents may breach the peace if someone objects during repossession. Police involvement in aiding repossession may also constitute breach of peace. Your loan contract cannot authorize conduct that breaches the peace.

Your Right to Object Peacefully

You can peacefully object to a repossession attempt. Repo agents should stop if you object calmly. But your objection must remain peaceful. Contact a lawyer after the fact if the agent doesn’t listen.

Never threaten repo agents or get physical with them. Don’t damage their property. Criminal charges could follow. Hiding your car from repossession is a crime. Any action to prevent repossession could expose you to criminal liability.

Special Rules for Military Members

Military service members get extra protection under federal law. The Servicemembers Civil Relief Act covers vehicles purchased before entering service. Lenders must get a court order to repossess such vehicles during military service.

Personal Property Left in Your Car

Your loan contract may authorize taking your personal belongings with the car. But if it does, your lender must follow specific notice requirements:

• Written notice within 15 days of discovering your property
• Reasonable times and locations to retrieve your belongings
• 30 days from notice date to claim your items
• Warning that unclaimed property will be disposed of

Don’t wait for the notice. Take everything out of your car if you’re present during repossession. Otherwise, contact the repossession company immediately. Call your lender if you don’t know where your car was taken.

You cannot be charged to get your property back. Requiring payment could be unlawful. The Consumer Financial Protection Bureau considers this an unfair trade practice. But recovering your belongings may take time. Items might go missing. Take everything out of your car beforehand if repossession is possible.

What Happens After Repossession

Your lender will resell your car to reduce your debt. Sales happen through private transactions or public auctions. The sale must follow specific legal requirements.

Required Notice Before Sale

Your lender must give you written notice before selling your car. The notice must arrive within a reasonable time before the sale. Ten days is the minimum reasonable timeframe.

The notice must include:

• Requirements to get your vehicle back
• Whether the sale will be public auction or private
• For public auctions: date, time, and location
• For private sales: earliest possible sale date
• Your right to an accounting of the debt
• Your potential liability for any deficiency

Sale information helps you determine your redemption deadline. You can attend public auctions to bid on your own car. Friends or family can bid on your behalf. You might buy it back for less than market value.

Commercially Reasonable Sale Requirements

All sales must be commercially reasonable. Generally, this means normal business transactions. Your lender doesn’t have to get top dollar. Auction sales typically bring less than private sales. That’s usually acceptable.

Selling cheaply to an employee probably isn’t commercially reasonable. Waiting too long to sell can also be problematic. Vehicle values drop over time. If you’ve paid 60% or more of the cash price, sales must happen within 90 days of repossession.

How Sale Proceeds Are Applied

Sale proceeds don’t go directly to your loan balance. First, they cover repossession costs. These include:

• Actual repossession expenses
• Storage charges for the repossessed vehicle
• Preparation costs for resale
• Sale expenses
• Reasonable attorney fees if allowed by your loan agreement

Only remaining proceeds reduce your debt after covering these costs. Sales rarely cover the full loan balance. If money is left over, your lender must give it to you. But you’ll more likely face a deficiency balance.

When to Get Legal Advice

Seek legal advice if anything seems wrong with the repossession process. Examples include:

• Repossession before you were actually in default
• Breach of peace during the repo
• Missing or incorrect information in pre-sale notice
• Very low resale price with questionable sale process
• False or deceptive tactics by lender or repo agent

A lawyer may help you challenge improper repossession. Our partner Solo can connect you with legal resources if you’re facing lender lawsuits.

Do You Still Owe After Repossession?

You’ll probably owe a deficiency balance. Repossession is just your lender’s first remedy for default. It doesn’t eliminate your debt unless sale proceeds cover everything. Deficiencies are common for several reasons:

• Repo and sale costs add to your debt
• Post-repo sales bring less than fair market value
• Vehicle depreciation often leaves you upside-down on your loan

Voluntary repossession can reduce your deficiency. Returning your car yourself eliminates repo agent costs. You could save hundreds of dollars. But you still owe the remaining balance.

Your lender must send written explanation of any deficiency they demand. The explanation must show:

• Debt amount before resale
• Vehicle sale price
• Credits you should receive
• All repossession and sale costs

You can request this explanation yourself. Your lender must provide it within 14 days of your request. No payment deadline exists for deficiencies. But your lender can sue you if you don’t pay. Many lenders sell unpaid deficiencies to debt buyers.

Can You Get Your Car Back After Repossession?

Filing bankruptcy might allow you to recover your car. Otherwise, you must exercise your right of redemption. Redemption requires paying your full loan balance plus all repossession costs. Past-due amounts aren’t enough.

You can redeem your car anytime before your lender sells it. Your post-repossession notice must include redemption instructions. Redemption is expensive, but it’s your only option outside bankruptcy.

Texas Repossession Resources

Several organizations offer help with repossession issues:

• TexasLawHelp.org provides repossession information and legal service directories
• Texas RioGrande Legal Aid, Lone Star Legal Aid, and Legal Aid of NorthWest Texas offer free legal services to eligible residents
• The Legal Hotline for Texans provides free advice for residents aged 60 and older
• The National Association of Consumer Advocates helps you find private consumer law attorneys
• State Bar of Texas’s Lawyer Referral & Information Service offers low-cost consultations
• Texas Office of Consumer Credit Commissioner accepts wrongful repossession complaints

You have rights even after repossession. Understanding Texas law helps you protect those rights. Act quickly if you’re behind on payments. Communication with your lender may prevent repossession. Professional guidance can help you navigate this difficult situation.