Orlando lawyer warns dealers on floor plan personal guarantees

Florida auto dealers may still face personal liability on floor plan financing even after closing a business, attorney Juan C. Burgos warns. The issue is drawing fresh attention as auto delinquencies rise and lenders tighten credit to independent and buy-here-pay-here dealers.

Why it matters: - Floor plan financing helps small and independent auto dealers stock inventory without paying cash upfront. - Personal guarantees can expose dealership owners to debt collection even after the business shuts down. - Rising auto delinquencies and tighter lending standards are putting more pressure on independent dealers that depend on floor plan credit.

What happened: - Orlando attorney Juan C. Burgos said dealership owners often do not realize their personal exposure remains after an LLC closes. - Burgos is the founder of Juan Burgos Law and a Florida Bar-licensed bankruptcy attorney based in Orlando. - Burgos said, "Closing the LLC doesn't close the guarantee. If you signed your name on that floor-plan line, the lender can still come after you personally." - Juan Burgos Law said it represents individuals and small businesses in Chapter 7, Chapter 11, Chapter 13 and Subchapter V cases in the U.S. Bankruptcy Court for the Middle District of Florida.

The details: - Floor plan financing is a revolving credit line used to keep dealership lots stocked. - The financing is typically backed by a personal guarantee tied to the owner, not just the dealership entity. - Federal Reserve Bank of New York data showed 90-day auto loan delinquencies at 5.60% in the first quarter of 2026, the highest since 2020. - The buy-here-pay-here sector, which relies heavily on floor plan credit, has seen major operators fail over the past year. - Banks that provide floor plan credit have become more selective about which dealers they continue to fund. - Burgos said dealers who have stopped operating can often eliminate guaranteed floor plan debt through Chapter 7. - Burgos said dealers who want to keep operating may qualify for Subchapter V, a streamlined Chapter 11 process for small businesses that does not require a creditors' committee. - Larger dealership operations, or owners whose personal exposure exceeds Chapter 13 limits, may use traditional Chapter 11. - Burgos said many Central Florida dealership owners are Hispanic. - Burgos said Florida has the highest share of Hispanic-owned small businesses of any state. - Burgos, who was born in Venezuela, said he represents clients directly in English, Spanish and Portuguese. - Burgos said, "Nobody should be putting off a decision this big because they're worried about explaining their finances in their second language." - Juan Burgos Law provides consultations at contact page or by phone at (407) 505-4190. - More information for auto dealers is available at the firm's auto-dealer bankruptcy page.

Between the lines: - The warning blends legal advice with a market message: dealership owners may be under more stress now because financing is tighter and defaults are rising. - Burgos is also positioning bilingual access as part of the firm’s service model for a large Hispanic business community in Central Florida. - The release focuses on a common trap for small-business owners: ending the business entity does not necessarily end the debt.

What's next: - Dealers with floor plan debt may need to assess whether Chapter 7, Subchapter V or traditional Chapter 11 fits their situation. - Owners facing personal guarantees may need to act before lenders push collection or before a business closure complicates negotiations. - Juan Burgos Law says it will continue handling bankruptcy matters for individuals and small businesses in Central Florida.

The bottom line: - For auto dealers, a closed business does not always mean closed liability. The personal guarantee can keep the owner on the hook.