Texas House Bill HB3955

Texas 2019 - 86th Regular

Caption

Relating to the repossession of a motor vehicle after default on an agreement.

Impact

The implications of HB 3955 are significant for both lenders and consumers. By prohibiting the collection of deficiency balances on vehicles valued under a specified threshold, the bill seeks to alleviate financial pressures on consumers who have defaulted. This change could encourage lenders to be more responsible in their lending practices and to consider the long-term impacts of repossession on borrowers' financial stability. The bill reinforces the principle of protecting consumers against excessive debt collection practices related to vehicle loans.

Summary

House Bill 3955 addresses regulations surrounding the repossession of motor vehicles after a borrower defaults on an agreement. It specifically introduces restrictions that prevent lenders from collecting a deficiency balance when a repossessed vehicle is sold for less than $2,000, unless the borrower has caused damage to the vehicle or has failed to make it available upon demand. This amendment aims to provide additional consumer protections for borrowers, particularly for those whose vehicles may hold lower market values.

Contention

While HB 3955 aims to shield consumers, it may raise concerns among lenders regarding the potential for increased risk in auto lending. Critics of the bill could argue that by limiting the lenders' ability to collect deficiencies on low-value vehicles, there may be an increased reluctance from financial institutions to offer loans at all, particularly to borrowers with uncertain credit histories. The balance between consumer protection and lender risk remains a point of contention, as stakeholders from various sectors examine the potential impacts of the bill on the broader automotive finance landscape.