Dealing with Solar Panel Debt and Liens in Bankruptcy
In Florida, many homeowners are approached by solar companies offering the promise of lower electric bills. While the idea of saving money and using clean energy is appealing, the financial side of things isn’t always so sunny.
The Cost of Going Solar
Installing solar panels can cost upwards of $40,000, and many financing plans come with high interest rates. Over time, that initial cost often climbs closer to $50,000 once interest is factored in. These financing agreements typically last for 20 years, making it a long-term commitment. It’s not unusual for homeowners to experience regret after signing up, especially if the savings don’t match expectations or their financial situation changes.
Solar Panel Liens: What Is a UCC Filing?
When you finance solar panels, the lender often files a UCC-1 financing statement with the Florida Secretary of State. This filing doesn’t put a lien on your house itself, but rather on the solar equipment (e.g., the panels, brackets, batteries, and wiring). The financing statement acts as a notice to other lenders that the solar company has a secured interest in that system. If you try to sell your home or refinance, that lien may need to be resolved first.
What If You Want Out?
If you’re stuck with a solar panel loan you no longer want, or can’t afford, bankruptcy may offer some relief.
Here are your options:
- Surrender the panels: In Chapter 7 bankruptcy, you can choose to give up the solar system. The lender may or may not come to remove it, depending on the contract.
- Renegotiate the loan: Sometimes the lender will send a reaffirmation agreement, giving you a chance to continue the loan under new terms. You may try negotiating for better interest or a lower balance.
- Value the panels in Chapter 13: If you file Chapter 13, you may be able to value the solar system based on its current market worth instead of the full loan balance. This could lower both your monthly payment and the total amount repaid. You might also qualify for a reduced interest rate as part of your repayment plan.
Can You Get Rid of the Lien?
The only guaranteed way to remove the UCC lien is to pay off the debt. However, UCC filings typically expire every five years unless renewed. That said, lenders usually refile before the expiration to keep their lien active.
Final Thoughts
Solar panels can be a smart investment, but for some homeowners, they become a financial burden. If you’re considering bankruptcy and wondering how your solar panel loan fits into the picture, it’s important to understand your rights and your options. Every case is different, so speaking with a bankruptcy attorney can help you figure out the best path forward. Need help navigating solar panel debt in bankruptcy? Contact our office to schedule a consultation.
The information provided on this page is for informational purposes only and does not constitute legal advice or create an attorney-client relationship. Please contact a licensed bankruptcy attorney to determine your bankruptcy options.