Most people assume that once their car is repossessed, the ordeal will be over. Unfortunately, that’s often not the case. In Texas, if your repossessed vehicle is sold for less than what you owe, the lender can come after you for the difference – what’s known as a deficiency balance. And yes, they can sue you for it.
What Is a Deficiency Balance?
A deficiency in balance is the amount left over after your repossessed vehicle is sold at auction, and the proceeds are applied to your loan. For example:
- You owe $20,000 on your car loan.
- The lender repossesses the vehicle and sells it for $12,000.
- That leaves a deficiency of $8,000, plus fees, interest, and attorney costs.
Why the Balance Is So High
Lenders often add thousands in costs to the remaining balance:
- Repossession fees
- Auction fees
- Legal costs
- Interest (even after the repo)
- Late penalties
This can push the amount you’re sued for well above the vehicle’s actual value – especially if your original loan was inflated by things like negative equity, extended warranties, or GAP insurance.
What Happens If You’re Sued
If the lender or a third-party debt buyer file a lawsuit against you, ignoring it can result in a default judgment – meaning they automatically win and can pursue bank levies, property liens, or even wage garnishment in other states.
You have the legal right to:
- Demand proof of the loan balance
- Challenge excessive fees
- Negotiate a reduced payoff
- Settle for less than what’s claimed
How We Help
At Case Law Legal, we’ve defended countless clients sued over car loan deficiencies. We scrutinize every detail of the contract, auction process, and collection activity to fight back – often reducing or eliminating the balance altogether.
Our attorneys can also help negotiate settlements or work out payment plans to protect your finances from long-term damage.
Don’t Ignore a Lawsuit Over a Repo
If you’ve been served or suspect a lawsuit is coming, act now. The sooner you speak with an attorney, the more options you have. Contact Case Law Legal for a free consultation and let us help you stop the spiral before it starts.
