The installer is gone. The phone number is disconnected, the website redirects to a competitor, and the warranty is worthless. But the loan payment still leaves your account every month. That is the moment most homeowners realize the real party on the other side of the dispute was never the installer — it was the lender.
What the FTC Holder Rule does
The Holder Rule, formally the FTC Trade Regulation Rule Concerning Preservation of Consumers' Claims and Defenses, says that when a seller arranges credit for a consumer purchase, the consumer can assert against the creditor any claims and defenses the consumer has against the seller. In plain language: if the installer lied to you or failed to deliver, you may be able to raise those same problems against the company that financed the deal.
The rule applies because most solar loans are not truly arms-length transactions between you and a bank. The lender and the dealer are connected: the lender pays the dealer directly, the dealer originates the loan, and the paperwork is presented as one package at your kitchen table.
Why bankruptcy of the installer does not end the case
A bankrupt installer is often judgment-proof. You could win a large award against it and still collect nothing because the company has no assets and no insurance left. The Holder Rule changes the target. If your loan documents preserve the rule — and many do, whether by explicit notice or by operation of law — your claims survive against the lender even though the dealer has disappeared.
This matters most in cases where the lender funded the loan before the system was complete, before inspection, or based on a completion certificate the homeowner never signed. The lender's defense is usually that it was just the bank and knew nothing about the installation. The Holder Rule is the answer to that defense.
What homeowners should look for in their paperwork
The key documents are the loan agreement and any notice of preservation of claims. Look for language that says the creditor is subject to all claims and defenses you have against the seller, or references the FTC Holder Rule. Then compare the loan file to the sales pitch:
- Was the loan funded on a completion certificate for work that was never finished?
- Did the financed amount include a dealer fee or add-on you were never told about?
- Were the production estimates you were shown the same as the estimates in the signed agreement?
- Did the installer go silent or file bankruptcy before inspection, interconnection, or warranty work?
- Were required Truth in Lending Act disclosures delivered late, incomplete, or missing?
How this fits into an arbitration strategy
Most solar purchase agreements and loan documents contain arbitration clauses. The Holder Rule does not eliminate those clauses, but it does let you bring the lender into the same arbitration as a respondent and assert the same claims you would have brought against the installer. That can turn a dead-end dispute against a bankrupt dealer into a real case with a real defendant.
The arbitration demand should name both the installer and the lender where the facts support it, and should clearly preserve the Holder Rule and any TILA claims. Skipping the lender is a common mistake that leaves money and leverage on the table.
The short version
A bankrupt installer is not the end of the road. If a finance company funded the deal, the FTC Holder Rule may let you pursue the same claims against the lender that you had against the dealer.
This article is general information about Texas law and is not legal advice. Reading it does not create an attorney-client relationship with Ray Law Group PLLC. Outcomes depend on the facts and documents in each matter, and legal deadlines apply.