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Repo question from Tote the Note in Texas

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I have a question... I am trying to help a friend clear a repo on her credit. It is from 2.5 years ago. The $26k (crazy, I know) note was carried by the lot and they were given a company car so no longer needed the vehicle. They contacted the car lot who told them it was no problem to bring it back and nothing derogatory would be placed on their credit. Now, years down the road, they find a $20,000 collection on their credit reports. I was reading up in Whychat's repo letter to suggest to them, but my questions are this...


They spoke with the lot and took the vehicle back with the understanding there would be nothing held against them. The vehicle was just put back in the pool of available vehicles and was not auctioned. It's my understanding that they can only be liable for the difference in what was owed and what the vehicle sold for at auction. Where did $20k come from?!?


And, they received NO notifications of any sort regarding the vehicle being labeled as a "reposession". None. And, and... they STILL do business with this company and have current car notes with them!

Would Whychat's letter still be appropriate? What would you all suggest?



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In Texas, as in many states, the creditor in this situation must do certain things in order to be able to pursue a deficiency balance. Once they take possession of the vehicle, they must notify the debtor of their right to redeem the collateral. If I am not mistaken, the redemption period is 10 days. If the vehicle is not redeemed, the creditor may then sell the vehicle, but it must be done in a commercially reasonable manner. In other words, they can't sell it to a family member for $5.00. Also, they must notify the debtor upon the sale of the collateral of any remaining deficiency balance after the sale. As this is a tote the note lot, there likely was no deficiency balance; they put it back on the street for at least what your friend owed on it, and possibly more.


I would probably start with a dispute with the CRAs, and see what happens.

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