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
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.
I needed a Spanish-speaking lawyer to help me with my Chapter 7 bankruptcy case. There are many lawyer options. After reading reviews from other clients of this attorney, I decided to contact him. It …I needed a Spanish-speaking lawyer to help me with my Chapter 7 bankruptcy case. There are many lawyer options. After reading reviews from other clients of this attorney, I decided to contact him. It was the best decision. He made me feel confident that he would help me through the process. Attorney Burgos is professional and always responds to emails, even on weekends. He explained how to start Chapter 7, and although I was scared because I had never been through anything like this before, Attorney Burgos explained everything point by point and handled the entire process. I didn't have to go to court, just an online class and a 5-minute Zoom meeting with the judge, and that was it. Super easy. You have the option of a payment plan. In short, if you need a good bankruptcy lawyer, I recommend him 100%.
Juan was great. Highly recommend his office! The situation was on a really tight timeline and he followed through. He was very empathic without sugar coating anything. Communication was always open an…Juan was great. Highly recommend his office! The situation was on a really tight timeline and he followed through. He was very empathic without sugar coating anything. Communication was always open and timely. Appreciate the extra steps he took to make sure the case was solid and felt very prepared for the hearing.
I am very grateful to Mr. Burgos. Excellent work, 100% thorough explanation, and very professional case management. A unique experience. My case became complicated with the Trustee, however, Mr. Burgo…I am very grateful to Mr. Burgos. Excellent work, 100% thorough explanation, and very professional case management. A unique experience. My case became complicated with the Trustee, however, Mr. Burgos handled the situation so well that I emerged victorious. You are in excellent hands.
From the first moment I contacted Mr. Burgos, he showed me attentiveness and professionalism.
I highly recommend him for his transparency and his willingness to listen to my situation. Thank you, Mr. …From the first moment I contacted Mr. Burgos, he showed me attentiveness and professionalism.
I highly recommend him for his transparency and his willingness to listen to my situation. Thank you, Mr. Burgos.
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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.
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.
I needed a Spanish-speaking lawyer to help me with my Chapter 7 bankruptcy case. There are many lawyer options. After reading reviews from other clients of this attorney, I decided to contact him. It …I needed a Spanish-speaking lawyer to help me with my Chapter 7 bankruptcy case. There are many lawyer options. After reading reviews from other clients of this attorney, I decided to contact him. It was the best decision. He made me feel confident that he would help me through the process. Attorney Burgos is professional and always responds to emails, even on weekends. He explained how to start Chapter 7, and although I was scared because I had never been through anything like this before, Attorney Burgos explained everything point by point and handled the entire process. I didn't have to go to court, just an online class and a 5-minute Zoom meeting with the judge, and that was it. Super easy. You have the option of a payment plan. In short, if you need a good bankruptcy lawyer, I recommend him 100%.
Juan was great. Highly recommend his office! The situation was on a really tight timeline and he followed through. He was very empathic without sugar coating anything. Communication was always open an…Juan was great. Highly recommend his office! The situation was on a really tight timeline and he followed through. He was very empathic without sugar coating anything. Communication was always open and timely. Appreciate the extra steps he took to make sure the case was solid and felt very prepared for the hearing.
I am very grateful to Mr. Burgos. Excellent work, 100% thorough explanation, and very professional case management. A unique experience. My case became complicated with the Trustee, however, Mr. Burgo…I am very grateful to Mr. Burgos. Excellent work, 100% thorough explanation, and very professional case management. A unique experience. My case became complicated with the Trustee, however, Mr. Burgos handled the situation so well that I emerged victorious. You are in excellent hands.
From the first moment I contacted Mr. Burgos, he showed me attentiveness and professionalism.
I highly recommend him for his transparency and his willingness to listen to my situation. Thank you, Mr. …From the first moment I contacted Mr. Burgos, he showed me attentiveness and professionalism.
I highly recommend him for his transparency and his willingness to listen to my situation. Thank you, Mr. Burgos.
