Sued by TD Auto Finance in Texas: Car Loan and Deficiency Suits

If your car loan is with TD Auto Finance, you probably signed the contract at a dealership, and the dealer then assigned it to TD. A lawsuit usually follows one of two paths: suit for the unpaid balance while you still have the car, or, more often, suit for a deficiency after the car was repossessed and sold. Either way, the case is governed by your retail installment contract, Finance Code chapter 348 and the repossession rules in chapter 9 of the Business & Commerce Code.

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Why the Plaintiff May Be "TD Bank, N.A."

TD Auto Finance is a division of TD Bank, N.A., a national bank. A TD Auto Finance customer letter explains the corporate history: Chrysler Financial Services Americas LLC began operating under the name TD Auto Finance LLC on June 1, 2011, and on December 31, 2021, TD Auto Finance LLC merged into TD Bank, N.A. The letter states that the predecessor Chrysler Financial and DaimlerChrysler entities, TD Auto Finance LLC and TD Bank, N.A. are "one and the same."

So a petition may name TD Bank, N.A. even though your contract and statements say TD Auto Finance. That alone is not a defect, but the plaintiff still has to show that it holds your contract. The letter lists TD Auto Finance Customer Assistance at PO Box 9226, Farmington Hills, MI 48333, (800) 556-8172. To confirm that a lawsuit is real, call the court clerk with the cause number on your citation.

The Office of Consumer Credit Commissioner's license search shows that TD Auto Finance LLC's Texas motor vehicle sales finance licenses are surrendered or cancelled. That is consistent with the merger: under Finance Code § 348.501(a), a holder of a Texas car contract must be licensed under chapter 348 or be an "authorized lender," a term that includes national banks (§ 341.001). Either way, chapter 348's rules for your contract still apply.

Contract Rules That Affect the Balance

• Late charges. A contract may allow a delinquency charge of up to 5% of an installment that is unpaid more than 15 days, or interest on the late installment, and only one delinquency charge per installment, however long it stays late (Finance Code § 348.107).
• Acceleration. The holder may demand the whole balance only if you are in default or it believes in good faith that your prospect of payment is impaired (§ 348.109).
• Payment history. On written request, the holder must send a statement of the dates and amounts of your payments and the total unpaid. You are entitled to one free statement every six months (§ 348.405). Request it early.
• Payoff quotes. A holder that gives you payoff information is bound by it for a reasonable time (§ 348.408).
• GAP and debt cancellation. If you bought a debt cancellation agreement or GAP waiver and the car was totaled or stolen, find out whether a claim was made and credited before the holder sued for the rest (§ 348.124).
• Repossession limits. The contract may not authorize entering your premises in violation of chapter 9 or a breach of the peace during repossession (§ 348.411).

Repossession, Sale and the Deficiency

After default, a secured party may repossess without a court order only without breaching the peace (Business & Commerce Code § 9.609). Every aspect of the later sale must be commercially reasonable (§ 9.610(b)), and you are entitled to advance notice of the sale (§§ 9.611, 9.614). If you returned the car yourself (a "voluntary surrender"), the same sale rules apply, and you can still be liable for a deficiency (§ 9.615(d)). Some points that often matter in a TD deficiency case:

• Timing of the notice. For businesses, a notice sent 10 days before the sale is automatically reasonable. In a consumer transaction there is no safe harbor: whether the notice was sent in a reasonable time is a question of fact (§ 9.612).
• What "commercially reasonable" means. A sale in the usual manner on a recognized market, at the current price in that market, or in line with dealer practice is commercially reasonable. The fact that a better price was possible at another time or place is not, by itself, enough to defeat the sale (§ 9.627). A defense usually needs specific facts about how and where the car was sold.
• Sales to insiders. If the buyer was the secured party or a related person and the price was significantly below what a proper sale would have brought, the deficiency is calculated using the price a proper sale would have brought (§ 9.615(f)).
• The 60% rule. If you had paid at least 60% of the cash price on a purchase-money loan for consumer goods, the holder generally must sell the car within 90 days after taking possession rather than keep it (§ 9.620(e)–(f)). In a consumer transaction, it can never keep the car in partial satisfaction of the debt (§ 9.620(g)).
• Rights you cannot sign away. The sale and notice rules, the deficiency explanation and the remedies for noncompliance cannot be waived or varied in the contract (§ 9.602). A waiver of the sale notice counts only if signed after default (§ 9.624(a)).

Reading the Deficiency Explanation

In a consumer case, the secured party must send a written explanation of the deficiency before or when it first demands payment of it in writing, and within 14 days after you request one (§ 9.616(b)). Section 9.616(c) requires the explanation to list, in this order:

1. The total owed, calculated as of a date not more than 35 days before the repossession, noting any rebate of unearned interest.
2. The amount the sale brought.
3. The balance after subtracting the sale proceeds.
4. The expenses of repossessing, storing, preparing and selling the car, and any attorney's fees.
5. Credits you are owed that are not already reflected, such as interest rebates.
6. The resulting deficiency.

Compare that letter with the amount in the petition. If the numbers do not match, or no explanation was sent, that is worth raising. When a secured party does not comply with chapter 9, the court may limit what it recovers and you may be entitled to damages (§§ 9.625, 9.626). See can I be sued for a car deficiency after repossession? and our Credit Acceptance guide, which covers the remedy provisions in more detail.

If You Also Bank With TD

The federal rule that bars a card issuer from offsetting a credit card debt against your deposit account at the same bank (12 C.F.R. § 1026.12(d)) applies to credit cards only, not to car loans. If you have a checking or savings account at TD Bank, read the setoff terms of your deposit agreement and your car contract.

On September 11, 2024, the Consumer Financial Protection Bureau issued a consent order against TD Bank, N.A. (File No. 2024-CFPB-0009). The Bureau found that the bank furnished inaccurate information to consumer reporting agencies about credit card and deposit accounts and failed to properly investigate disputes, in violation of the Fair Credit Reporting Act and Regulation V. The order required $7.76 million in consumer redress and a $20 million civil penalty. The Bureau's summary does not mention auto loans, and the order says nothing about your car loan or your lawsuit.

Deadlines, Court and Limitations

Many deficiency suits are within the $20,000 justice court limit. A suit by a bank is a "debt claim case" there (Texas Rule of Civil Procedure 500.3(b)), and your answer is due by the end of the 14th day after service (Rule 502.5). In county or district court, the answer is due by 10:00 a.m. on the Monday after 20 days (Rule 99(b)). Use our answer deadline calculator.

The holder must prove the contract, its right to enforce it, your default and the deficiency, usually with a records affidavit (what is a business records affidavit?). The four-year limitations period (Civil Practice and Remedies Code § 16.004) is a defense you must raise yourself. Also check whether your contract has an arbitration clause and what it says; terms vary from contract to contract.

Collection Conduct and Separate Claims

The Texas Debt Collection Act applies to creditors collecting their own debts (Finance Code ch. 392). A law firm that regularly files consumer collection suits is generally a "debt collector" under the federal Fair Debt Collection Practices Act (Heintz v. Jenkins, 514 U.S. 291 (1995)), and once it knows you have a lawyer it generally must contact your lawyer instead of you (15 U.S.C. § 1692c(a)(2)). Claims for violations are brought as a separate lawsuit, typically in federal court, not as a counterclaim in the deficiency case, and they are a separate service. See our FDCPA page.

How We Defend TD Auto Finance Suits

We file your answer, request the contract and assignment, the payment history, the repossession and auction records, the pre-sale notice and the deficiency explanation, and test each one against chapters 9 and 348. Then we press the defense or negotiate from there. Our firm has had hundreds of debt lawsuits dismissed. We work statewide, mostly by phone, email and e-filing; our phones are answered 7 days a week, and we speak Spanish.

Flat fees from $400, with payment plans available. Call or text (214) 945-0000 for a free case evaluation.

Texas Debt Law is not affiliated with TD Auto Finance or TD Bank, N.A. This guide is general information, not legal advice.

Sources

• TD Auto Finance, "One and the Same" customer letter (corporate history and merger into TD Bank, N.A.), td.com
• OCCC license search (ALECS) (Motor Vehicle Sales Finance; TD Auto Finance LLC)
• Texas Finance Code, chapter 348 (§§ 348.107, 348.109, 348.124, 348.405, 348.408, 348.411, 348.501) and chapter 341 (§ 341.001)
• Texas Business & Commerce Code, chapter 9 (§§ 9.602, 9.609–9.616, 9.620, 9.624–9.627)
• CFPB enforcement action: TD Bank, N.A. (Sept. 11, 2024)
• 12 C.F.R. § 1026.12, eCFR
• Texas Rules of Civil Procedure (Rules 99, 500.3, 502.5)
• Texas Civil Practice and Remedies Code, chapter 16 (§ 16.004)

General information, not legal advice for your case.