Vehicle Repossession Laws
Copyright ©2010-2021 - June 20, 2021
(1) Want to get back on your feet? Miss a couple car payments!
(2) How to stop the repo man? Pay your car payment!
(3) What should you do if a repo man comes to repossess your car? Let him! You can always call the bank later.
(4) Your health is worth more than a car: stay safe.
(5) Are you having financial problems? Call your bank today, right now, and discuss the problems. Most banks are more than happy to work with their customers, but it is your responsibility to tell your bank that the problems exist.
Repossession Laws - Vehicle Repossession Business Company
Laws regulating repossession companies are too complex and numerous to list in one article. Too, each state has its own specific laws, and if you are interested in becoming a repo man then it is your responsibility to spend the time necessary to sit down and discuss with a state employee all of the laws that your company must abide by. Vehicle repossession companies must have state licenses, federal Department of Transportation licenses (for tow trucks), and numerous other certifications and permits. Being a professional repo man is not a simple thing that anyone can do.
Stating it plainly, the vehicle repossession business requires that the repo man be an individual who is self-starting, self-disciplined, and skilled in researching data (addresses, social security numbers, license numbers, phone numbers, etc.). If an individual does not have the self-initiative to visit the several government agencies to acquire all needed licenses, then the individual is not well qualified to be a repo man.
Repossession Laws - Vehicle's Owner
If you are the owner of a car being repossessed and you are wondering what legal rights you have... generally you have none. On the back of the vehicle credit agreement — and in very small letters — is probably the industry standard wording that the lender has the right to repossess your vehicle whenever and wherever the lender may choose. The repo man usually does not have the legal right to break into your house to repossess a vehicle, but if the vehicle is outside (which vehicles almost always are), then the repo man has authority from the lender to drive onto your land (city residence, rural property, etc.) and remove the vehicle. You signed the contract and you are legally obligated by what you have already agreed to.
If a repo man is repoing your car and you are not sure if what he is doing is legal, then call your local police or sheriff's department and ask them for advice. Do not confront the repo man, and especially do not pretend to know the repo laws. Chances are the repo man will be knowledgeable of repossession laws, and your pretending to being smarter than him will only exasperate your problems.
Too, if the repo man does break a law (it can happen), then stay in your house while the repo man is doing his work and call your local law enforcement to report the incident. If your complaint is legit, then you will be in the very best position to collect any possible damages, and if your complaint is not legit then you will have saved yourself a ton of grief and trouble.
In Texas and likely most other states there is a state law titled "Hindering Secured Creditors." The following are examples of the laws that protect lien holders.
Texas Penal Code
§ 32.33 Hindering secured creditors
(a) For purposes of this section:
(1) "Remove" means transport, without the effective consent of the secured party, from the state in which the property was located when the security interest or lien attached.
(2) "Security interest" means an interest in personal property or fixtures that secures payment or performance of an obligation.
(b) A person who has signed a security agreement creating a security interest in property or a mortgage or deed of trust creating a lien on property commits an offense if, with intent to hinder enforcement of that interest or lien, he destroys, removes, conceals, encumbers, or otherwise harms or reduces the value of the property.
(c) For purposes of this section, a person is presumed to have intended to hinder enforcement of the security interest or lien if, when any part of the debt secured by the security interest or lien was due, he failed:
(1) to pay the part then due; and
(2) if the secured party had made demand, to deliver possession of the secured property to the secured party.
(d) An offense under Subsection (b) is a:
(1) Class C misdemeanor if the value of the property destroyed, removed, concealed, encumbered, or otherwise harmed or reduced in value is less than $20;
(2) Class B misdemeanor if the value of the property destroyed, removed, concealed, encumbered, or otherwise harmed or reduced in value is $20 or more but less than $500;
(3) Class A misdemeanor if the value of the property destroyed, removed, concealed, encumbered, or otherwise harmed or reduced in value is $500 or more but less than $1,500;
(4) state jail felony if the value of the property destroyed, removed, concealed, encumbered, or otherwise harmed or reduced in value is $1,500 or more but less than $20,000;
(5) felony of the third degree if the value of the property destroyed, removed, concealed, encumbered, or otherwise harmed or reduced in value is $20,000 or more but less than $100,000;
(6) felony of the second degree if the value of the property destroyed, removed, concealed, encumbered, or otherwise harmed or reduced in value is $100,000 or more but less than $200,000; or
(7) felony of the first degree if the value of the property destroyed, removed, concealed, encumbered, or otherwise harmed or reduced in value is $200,000 or more.
(e) A person who is a debtor under a security agreement, and who does not have a right to sell or dispose of the secured property or is required to account to the secured party for the proceeds of a permitted sale or disposition, commits an offense if the person sells or otherwise disposes of the secured property, or does not account to the secured party for the proceeds of a sale or other disposition as required, with intent to appropriate (as defined in Chapter 31) the proceeds or value of the secured property. A person is presumed to have intended to appropriate proceeds if the person does not deliver the proceeds to the secured party or account to the secured party for the proceeds before the 11th day after the day that the secured party makes a lawful demand for the proceeds or account. An offense under this subsection is:
(1) a Class C misdemeanor if the proceeds obtained from the sale or other disposition are money or goods having a value of less than $20;
(2) a Class B misdemeanor if the proceeds obtained from the sale or other disposition are money or goods having a value of $20 or more but less than $500;
(3) a Class A misdemeanor if the proceeds obtained from the sale or other disposition are money or goods having a value of $500 or more but less than $1,500;
(4) a state jail felony if the proceeds obtained from the sale or other disposition are money or goods having a value of $1,500 or more but less than $20,000;
(5) a felony of the third degree if the proceeds obtained from the sale or other disposition are money or goods having a value of $20,000 or more but less than $100,000;
(6) a felony of the second degree if the proceeds obtained from the sale or other disposition are money or goods having a value of $100,000 or more but less than $200,000; or
(7) a felony of the first degree if the proceeds obtained from the sale or other disposition are money or goods having a value of $200,000 or more.
TEXAS MOTOR VEHICLE LAWS P.C. 1346
REMOVING PARTS FROM A MOTOR VEHICLE
Whoever shall maliciously or willfully without authority from the lien holder remove from any mortgaged motor vehicle or any portion thereof such as floor mats, hubcaps, radio, tires, heater, air-conditioner, starter, battery, or any attachments, accessories or any part attached to such mortgaged vehicle which is necessary in the use or operation thereof or whoever knowingly buys, receives, or has in his possession any of said articles or any part thereof so unlawfully removed, shall be fined not exceeding $100.00 or be imprisoned in jail not less than six months or more than one year.
FRAUDULENT DISPOSITION OF MORTGAGED PROPERTY
Article 1558 (1430) (950) (797) of Vernon’s Code of the State of Texas
If any person has given or shall hereafter give any mortgage or lien in writing on any motor vehicle and shall remove the same or any part thereof out of the State, or out of the county in which it was located at the time the mortgage or lien was created, or shall sell or otherwise dispose of the same with the intent to defraud the person having such lien, either originally or by transfer, he shall be confined in the penitentiary for not less than two years nor more than five. Proof that the mortgagor removed such property out of the county in which it was located at the time the mortgage or lien was created or that he sold or otherwise disposed of the same originally or by transfer and that the mortgagor failed to pay the debt when due for which the mortgage or lien was given, or shall fail to deliver possession of said property upon demand of the mortgagee, shall be prima facie evidence that such property was removed or disposed of with intent to defraud as provided in this Act, shall be subject to penalties mentioned herein.
In a nutshell, it is a felony crime if you fail to allow the creditor to repossess your vehicle. I will state again that it is to your best interest to remain polite, hand the repo man your keys, and allow the repo man to do his job.
Vehicle Repossession Company Insurance
One universal requirement is liability insurance. Before a bank or other lender will consider hiring you to repossess vehicles, you must carry about a $1,000,000.00 liability insurance policy to protect yourself and the lender in case there is damage to the vehicle or other property. Depending on your state and your history with insurance companies, expect to pay $1,000.00 to over $5,000.00 per month for insurance on your company and tow truck.
Repossession Rights - Bank Repos, Credit Union Repos, Dealer Repos
Your rights as the debtor are not much. As stated previously, you likely already signed a contract that states that the lender can repossess your vehicle whenever and wherever the lender chooses. My best advice to you is to not worsen your situation; be polite, hand the repo man your keys, cooperate fully, and be patient. If you have any legal rights to keep the vehicle, then you will get the vehicle back, but if you do not have any legal rights then your being aggressive or defensive towards the repo man and/or lender will only result in your remaining rights being minimalized. Your highest right is to remain calm and to make the best of a bad situation.
Repo Laws A short list of laws for repossession companies and for vehicle owners.
Repo Questions and Answers Answers to questions asked about laws and repossessions.
First Repo An article about an individual repossessing their first vehicle.
How to Become a Repo Man Some good basic information about the repossession business and how to become — or avoid becoming — a repo man.
Disclaimer: The information provided on this website is opinion only and is not intended to be legal advice. Consult a legally licensed attorney for legal advice.