Still Paying a Titan Solar Power Loan? The FTC Holder Rule May Matter

Titan Solar Power shut down in June 2024 and entered Chapter 7 bankruptcy on June 20. The U.S. Bankruptcy Court for the District of Arizona keeps the official case records here ↗.

For customers with financed systems, that did not make the monthly loan disappear. It also does not mean the lender is automatically outside the dispute.

The place to start is the financing agreement itself.

Look for this paragraph in the loan

Search the agreement for a notice beginning: “ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES...”

That is the FTC Holder Rule, 16 CFR Part 433 ↗. It was created to stop certain consumer financing arrangements from cutting the financing company off from problems with the underlying sale.

In covered transactions, a valid claim or defense against the seller can follow the credit contract to the company that holds it. That can matter when the seller is no longer around.

There are limits. The rule does not create a claim just because Titan went bankrupt, and finding the notice does not automatically cancel a loan. The homeowner still needs an underlying claim or defense against the seller. The FTC's 2012 advisory opinion ↗ also says affirmative recovery under the Holder Rule itself is limited to the amount paid under the contract.

The same opinion says the rule is not limited to cases where the product or service was completely worthless or where rescission would otherwise be available. The FTC reviewed the rule again in 2019 and kept it in place ↗.

Solar financing makes this worth checking

A lot of solar loans are not obtained the way someone might independently shop for a car loan or a home-equity loan. The financing can be presented during the same sales process as the panels.

The Consumer Financial Protection Bureau's 2024 report on solar financing ↗describes installers working with solar-specific lenders so financing can be offered as part of the sale. From the homeowner's side of the table, the salesperson, installer and financing can feel like one transaction.

That does not make every solar lender responsible for every installer problem. It does mean the way the loan was originated matters. If Titan helped arrange the financing, the actual loan documents are worth reading before assuming Titan's bankruptcy ended the issue with Titan.

We have already seen this problem after another solar company collapsed

Power Home Solar, later known as Pink Energy, filed for bankruptcy in 2022. Its customers were left with the same basic problem now facing some former Titan customers: the installer was gone, but the financing remained.

In November 2022, attorneys general from nine states contacted Dividend Solar Finance, GoodLeap, Cross River Bank, Sunlight Financial and Solar Mosaic. They asked the lenders to suspend payments and interest for customers who had not received working systems and to help customers reporting other installation and performance problems.

The North Carolina Attorney General's announcement ↗described complaints about systems that allegedly underperformed, malfunctioned, did not work at all, or had not received utility approval to connect to the grid. Those were consumer complaints being investigated, not findings that every lender or every transaction violated the law.

Minnesota went further in a separate 2022 case. The Minnesota Attorney General sued solar sellers and lenders ↗and said the lenders had partnered with the sellers to finance the transactions and were subject to consumer claims and defenses arising from those sales.

Neither case decides what happens with a Titan loan. They do show why “Titan is bankrupt” and “I still owe the lender” should not automatically be treated as two completely unrelated facts.

Before doing anything else, get the paperwork together

The useful record is the one that shows what was sold, how the purchase was financed and what Titan actually delivered.

• Solar sales or installation agreement
• Complete loan agreement
• Any notice that the loan was sold or transferred
• The Holder Rule notice, if it appears in the agreement
• Original proposal and system specifications
• Written warranties and production representations
• Sales emails, texts and other written representations
• Installation, inspection, permission-to-operate and activation records
• System production, repair and service records
• Loan statements and payment history

The underlying facts still control. A Holder Rule notice is not proof that Titan breached a contract or violated consumer law. It is a reason to look at the financing relationship instead of assuming the loan exists in a vacuum.

SolarComplaint's Titan customer-help page separates financing questions from warranty, repair, unfinished-work, home-sale and bankruptcy issues. The Titan warranty page covers the separate question of what happened to warranty coverage after the bankruptcy.

Sources

Federal Trade Commission. Holder in Due Course Rule, 16 CFR Part 433 ↗.

Federal Trade Commission. 2019 review of the Holder Rule ↗.

Federal Trade Commission. 2012 Holder Rule advisory opinion ↗.

Consumer Financial Protection Bureau. Issue Spotlight: Solar Financing ↗.

North Carolina Department of Justice. Nine-state Pink Energy lender request ↗.

Minnesota Attorney General. 2022 solar seller and lender lawsuit announcement ↗.

U.S. Bankruptcy Court for the District of Arizona. Titan Solar Power bankruptcy case hub ↗.

More Titan Solar Power research

Titan Solar Power bankruptcy, closure and customer help →
Titan customer research paths →
Titan warranty information after bankruptcy →
Solar sales, financing and what happens after a complaint →
Federal solar consumer resources →
Research methodology and sourcing standards →