The bankruptcy of Tricolor Auto has left some Houston customers without cars and uncertainty over who will take over their auto loans.
HOUSTON — A Texas-based auto dealer and lender that once billed itself as a financial lifeline for underserved buyers is now bankrupt, leaving thousands of customers with unanswered questions.
Tricolor Holdings, which operated more than 60 dealerships across six states, filed for Chapter 7 bankruptcy in September. Court filings show the company listed more than $1 billion in liabilities and identified over 25,000 creditors.
The U.S. Justice Department is also reportedly investigating allegations of fraud at the company.
For Pasadena resident Sheriva Shed, the bankruptcy has meant losing her 2018 Chevy Equinox. Shed said the car had problems from the start, including severe rust damage and acceleration issues.
She brought it to Tricolor’s shop twice for repairs, the last time in August. That’s when, she said, it disappeared.
“Nobody would answer, or they’d say they’d call me back,” Shed told KHOU 11. “So I got an Uber and went up there, and there were herds of people outside. That’s when I was like, what’s going to happen to our cars?”
Shed later learned her vehicle had been repossessed and a repossession mark added to her credit history. She said it has already hurt her chances of getting approved for another car.
“The first thing I’m hearing is you need a co-signer, you have a repossession. It’s Tricolor,” she said. “But my car wasn’t repossessed.”
Tricolor targeted buyers with little or no credit history, including many Hispanic immigrants. In company statements, Tricolor said it aimed to serve “credit invisible borrowers left behind by mainstream financial providers.”
However, financial analysts had already flagged the company’s exposure. In a June report, S&P Global Ratings noted that Tricolor’s reliance on immigrant borrowers left it vulnerable to federal policy shifts.
Analysts said changes in immigration enforcement could increase delinquencies and losses on the company’s loans — a risk that appears to have caught up with Tricolor.
With Tricolor shuttered, customers are left with few options. Legal experts say those who lost vehicles or prepaid for services can file claims in bankruptcy court. Others may attempt to pursue civil suits.
For borrowers still making payments, consumer advocates warn that Tricolor’s loan portfolio could soon be sold to another finance company. Customers should carefully review any new paperwork before sending payments.
As for Shed, she just wants answers.
“I just need somebody to point me in the direction if we can get our cars back, let us get our cars back,” she said.
KHOU 11 reached out to Tricolor for comment, but calls were not returned.
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