Auto Dealer Bankruptcy: When Your Floor Plan Personal Guarantee Is on the Line

Floor plan lender tightening your line? Your personal guarantee follows you even if the dealership closes. Chapter 7, 11, and Subchapter V options for Florida auto dealers. Free consultation.

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Auto Dealer Bankruptcy · Floor Plan Financing · Free Consultation

When Your Floor Plan Line Gets Pulled, Your Personal Guarantee Is What’s Actually at Risk

If you own a small or independent dealership, floor plan financing is what keeps cars on your lot. It’s also almost always backed by your personal guarantee — which means if the lender tightens the line, freezes it, or calls the loan, that debt can follow you personally, even if you close the dealership.

Why This Is Happening Right Now

This isn’t a slow news year for independent dealers. Nationally, 90-day auto loan delinquencies hit 5.60% in the first quarter of 2026 — the highest rate since 2020, according to Federal Reserve Bank of New York data. The buy-here-pay-here sector, which depends heavily on floor plan credit to stay stocked, has already seen major operators fail this past year, and banks that extend floor plan credit have gotten noticeably more cautious about who they’ll keep funding.

None of that is your fault. But when a lender decides to pull back, the paperwork you signed to get that credit line in the first place is what determines whether the problem stays with the business or follows you home.

Situations We See Often

Your Floor Plan Line Was Frozen or Cut

The lender pulls back, you can’t restock, and now you’re stuck with debt on a business that can’t operate the way it used to.

You’re Being Called “Out of Trust”

This means a car sold off the lot without the floor plan lender getting paid off for it — often unintentional, but lenders treat it as a serious default and can move fast.

The Dealership Already Closed

You shut the LLC down thinking that was the end of it, and now the lender is coming after you personally for the balance.

You Want to Keep the Lot Open

The business is viable, but the debt load from a rough stretch needs to be restructured before it sinks a business that could otherwise survive.

Your Options, Depending on Where You’re At

If you’re…	This usually fits	What it does
Done with the dealership, want the guarantee gone	Chapter 7	Eliminates personally guaranteed floor plan debt, typically within 3-5 months
Want to keep the lot open, debt is under the small-business threshold	Subchapter V	Restructure and keep operating, no creditors’ committee, plan due in 90 days
Larger operation, or personal exposure too high for Chapter 13	Chapter 11	Full reorganization, no debt ceiling, more complex and costly

Want the full picture on any of these? Read our guides to Chapter 7, Subchapter V, or Chapter 11.

Where Your Case Gets Filed

We file in the U.S. Bankruptcy Court for the Middle District of Florida — the Orlando Division for most Central Florida dealers, the Tampa Division for Polk County. It’s the only federal district we practice in, and today nearly all hearings are held remotely by video.

A significant share of Central Florida’s independent dealership owners are Hispanic — Florida has the highest share of Hispanic-owned small businesses of any state in the country. Attorney Juan Burgos was born in Venezuela and represents clients directly in English, Spanish, and Portuguese — no interpreters, no runaround.

Frequently Asked Questions

I already closed my dealership. Does that end my floor plan guarantee?+

No. Closing the LLC or corporation ends the business, but a personal guarantee is a separate legal obligation from you as an individual. The lender can still pursue you personally for the balance unless that guarantee is addressed directly — usually through bankruptcy.

What does “out of trust” actually mean?+

It means a vehicle financed under your floor plan line was sold, but the lender wasn’t paid off for that specific unit as required. Lenders treat this as a serious breach of the floor plan agreement, and it can move quickly toward legal action or a demand on your personal guarantee. If you’re in this situation, don’t wait to talk to someone.

Can I keep my house and personal savings?+

In the large majority of cases, yes. Florida’s homestead exemption is one of the strongest in the country, and retirement accounts are fully protected under federal law. We’ll walk through exactly what’s protected in your specific situation during the consultation.

Do I need to be a U.S. citizen to file?+

No. Florida residency and meeting the income requirements are what matter, not immigration status.

What Our Clients Say

Client Success Stories & Settlements

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Genesis Dominguez 7 months ago

Excelente abogado y gran profesional. Juan C. Burgos se encargó de mi caso de accidente de auto con mucha dedicación y compromiso desde el primer día. Siempre estuvo disponible para aclarar mis dudas, me explicó cada paso del proceso con claridad y me hizo sentir Tranquila y respaldada en todo momento. Gracias a su experiencia y esfuerzo, mi caso se cerró con éxito. Estoy muy agradecida por su arduo trabajo y lo recomiendo ampliamente a cualquier persona que necesite un abogado confiable y eficaz.

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Toni Curling 7 months ago

Working with Juan C. Burgos, was an excellent experience. He was extremely communicative and always quick to respond, treating our situation with the urgency it deserved. His knowledge and guidance made a stressful process much easier to navigate, and his professionalism gave us real peace of mind throughout. I highly recommend Juan Burgos to anyone in need of reliable, skilled, and truly supportive legal representation.

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matthew myers 7 months ago

100% recommend this lawyer office felt very hard for my case and got me the settlement. I deserve deserved.

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Marle Rami 7 months ago

Quiero expresar mi más sincero agradecimiento al abogado Juan Carlos Burgos por toda la ayuda que me brindó durante mi proceso de bancarrota. Desde el primer momento fue profesional, claro, paciente y muy humano. Siempre me explicó cada paso del proceso de manera sencilla, respondió todas mis dudas y me dio la tranquilidad que necesitaba en uno de los momentos más difíciles de mi vida.

Gracias a su apoyo pude organizar mi situación financiera y atravesar este proceso con confianza y esperanza.

Lo recomiendo 100 % a cualquier persona que necesite un abogado de bancarrota responsable, comprometido y verdaderamente interesado en ayudar a sus clientes.

¡Mil gracias por todo, abogado Burgos!

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Patricia Leon 7 months ago

El abogado Juan Burgos me ayudó con mi caso de bancarrota. El fue muy atento claro y transparente con todo el proceso desde el principio hasta al final! Yo lo recomiendo al 100%

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Yamilette Torres 8 months ago

I couldn’t have asked for a better lawyer to handle my accident case. From start to finish, he was professional, compassionate, and always kept me updated every step of the way. He fought hard to ensure I received the compensation I deserved, and truly cared about my well-being throughout the entire process. His communication was excellent, and he made everything so easy to understand. I highly recommend him to anyone who needs a lawyer that genuinely puts their clients first. Thank you for everything! 🙏🏼

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Luis Cuba 8 months ago

El licenciado burgos me asistió en mi casa y la oferta fue baja y me consiguió mi ma los recupera un eselentetrabj

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Marco Bustos 8 months ago

Excelente servicio y atención y excelente ser humano. Me lo recomendó el gordito de la suerte.

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cesar guedez 8 months ago

Muy agradecido por su profecionalismo siempre contesto mis Llamadas y preguntas con paciencia, y consiguio 280mil dolares por mi Caso de accidente de auto gracias de todo corazon

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Bring Your Numbers. Get a Straight Answer.

Free, confidential consultation. Bring your floor plan agreement and your current numbers — you’ll leave knowing exactly which chapter, if any, fits your situation.

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By Juan C. Burgos, Esq. — Florida Bar No. 84056. This page is for general educational purposes and does not create an attorney-client relationship or substitute for individual legal advice. Every situation is different. Juan Burgos Law is a debt relief agency under federal law.