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Auto Loan Deficiency Lawsuits

If you reside here in San Antonio anywhere in Texas and your vehicle has been reprocessed, please read the following.

When your car is repossessed, your lender must sell the vehicle in a “commercially reasonable manner.” Once the car is sold, the lender must reduce your loan by the amount sold. If you still owe on your loan AFTER the sale, you have a “deficiency” and can be sued for the amount. These deficiencies are now being sold to debt collectors who bring the suit. Your credit union or bank might also bring a deficiency lawsuit. The Texas Business and Commerce Code, however, creates many obstacles for the debt collector.

Notice of Sale

The debt collector must send you proper notice before selling your car at auction. Proper notice is a question of fact and differs in every case, but the consensus is that the notice should be sent at least ten days before the auction. Simple notice is not enough; it must strictly comply with the Texas Business and Commerce Code. This is generally the most successful way to defend yourself in an auto loan deficiency case.

Vehicle Auction

The debt collector or credit union also must show the car was conveyed in a “commercially reasonable manner.” Cars are generally sold an industry auction. While most vehicles are properly sold, the Plaintiff still most prove their case in this regard.


The debt collector or credit union must bring a lawsuit for a deficiency within 4 years of your default on the loan.

Debt Collectors

If your lawsuit is brought by a debt collector as opposed to the company that lent you the money, you have a greater chance of winning your lawsuit. The debt collectors will often not have all the proper paperwork needed to show proper notice was sent and that the car was properly sold.

Contact Us

If you have been sued for an auto loan deficiency, call 800-862-1260 or 210-222-2288 (in San Antonio). You may have as little as 14 days to respond.

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