Auto Loan Deficiency Lawsuits
Deficiency lawsuits are filed to recover the remaining loan balance after a vehicle is repossessed
Car loans are secured loans. If a car purchaser fails to make loan payments, the lender can repossess the vehicle and sell it to satisfy the loan balance. If your car is sold at auction and your financial institution claims that the purchase price they collected for your vehicle is less than the amount you owe on the loan, you face a potential auto loan deficiency lawsuit.
Car loans and the Texas Business and Commerce Code
Section 9 of the Texas Business and Commerce Code gives secured parties such as auto lenders the legal right to take possession of collateral (like a vehicle) if the borrower defaults on the loan. The borrower has a limited amount of time to reclaim the vehicle by satisfying the full remaining obligation under the loan agreement. After that time period has passed, the lender is permitted to auction the vehicle. The sale must be completed in a commercially reasonable manner, which includes obtaining the best possible price for the vehicle.
Potential defenses to an auto loan deficiency lawsuit
Numerous potential defenses exist in an auto loan deficiency lawsuit, including:
- Failure to abide by legal notice requirements — Creditors must follow notice to consumer provisions governing loan deficiencies before they may initiate a lawsuit. Often times, specific document requirements and deadlines are not complied with.
- Contractual violations — Sometimes lenders violate contractual terms while a loan is active or during the repossession process.
- Miscalculation — Between the original loan amount, interest, late fees and other penalties, figuring out how much money is supposedly owed after an auction sale can be very complicated. A financial institution or debt buyer might not have current or accurate information.
Contact a Texas attorney for a free consultation about an auto loan deficiency claim
Tom Thomas Legal, P.C. represents Texans who are being targeted in auto loan deficiency lawsuits and debt-related claims. To make an appointment for a free initial consultation, please call 855-898-3328 or contact us online. We have offices in in Dallas, Houston, Austin, San Antonio, El Paso and Fort Worth.
